United States Court of Appeals,

Fifth Circuit.

No. 91–1031.

In the Matter of Kelly P. BRADLEY, Debtor.

Kelly P. BRADLEY, Appellant,

v.

PACIFIC SOUTHWEST BANK, FSB, Appellee.

May 13, 1992.

Appeal from the United States District Court for the Northern District of Texas.

Before KING, JOHNSON and EMILIO M. GARZA, Circuit Judges.

JOHNSON, Circuit Judge:

Even before the ink had dried on the joint resolution of Congress that admitted Texas as the

twenty-eighth state in the Union, Texas citizens enjoyed broad homestead rights. See Tex. Const.

art. VII, § 22 (1845). Not much has changed in the last 145 or so years. As it did in the dawning

days of the state, the homestead exemption in Texas continues to "protect citizens and their families

from the miseries and dangers of destitution." Franklin v. Coffee, 18 Tex. 413, 415–16 (1857).

Kelly P. Bradley, the debtor in this bankruptcy proceeding, appeals the determination of both the

bankruptcy court and the district court that she is not entitled to homestead rights in all 129.47 acres

of her family farm. Concluding that this determination is based upon an incorrect understanding of

Texas homestead law, this Court reverses the judgmen t o f the courts below and remands to the

district court for further proceedings consistent with this opinion.

I. FACTS AND PROCEDURAL HISTORY

Debtor Kelly P. Bradley and her husband, Scott Bradley, own 129.47 acres of rural property

located within the city limit s of Westlake, Texas. The Bradleys acquired this property, known as

"Paigebrooke Farm," through a partnership agreement they executed with several other investors in

1977. The partnership agreement specified that the Bradleys could occupy fifteen acres of1 According to the bankruptcy court's findings of fact and conclusions of law, the buildings that

the Bradleys added to the Paigebrooke Farm property included "a small foreman's house, an

eight-stall horse stable with a tack and feed room, two storage sheds, another storage shed for

hay, a chicken coop, two corrals and a chute for working cattle." Findings of Fact at 3. Paigebrooke Farm as their homestead, but the partnership would seek to develop the remaining

114.47 acres of the property for commercial or residential use. The Bradleys moved into a house

located in the approximate center of the farm and, in accordance wit h t he partnership agreement,

constructed several ranch buildings within an unfenced fift een acre section surrounding the family

house. 1 Since 1978 they have used the remaining acreage to grow hay and raise cattle.

In 1982, after repeated unsucces sful attempts to develop the remaining 114.47 acres of

Paigebrooke Farm, the Bradleys terminated the partnership and purchased the interests of the other

investors. Subsequently, the Bradleys have used all 129.47 acres of Paigebrooke Farm as their home

and ranch. Besides growing hay and raising cattle on the remaining 114.47 acre section of the

property

, since at least 1985 they have also bred and sold horses on the property

. The Bradleys have

registered the entire farm with the USDA Soil Conservation Service and have filed Schedule F farm

income forms with their annual tax returns.

In August 1985 Kelly Bradley and her husband entered into a loan transaction with Seguin

Savings Association, the predecessor of current creditor Pacific Southwest Bank, FSB. Seguin

Savings agreed to loan the Bradleys a sum in excess of five millio n dollars. As part of the collateral

to secure payment of the note, the Bradleys granted Seguin Savings a third lien deed of trust covering

all of Paigebrooke Farm except the fifteen acres on which their home and ranch buildings stood. In

addition, the Bradleys executed a "homestead disclaimer" that purp o rt ed to release all of their

homestead claims to the 114.47 acres.

Two years later, Kelly Bradley filed a voluntary petition for Chapter 11 ba n kruptcy relief.2 A Texas debtor in bankruptcy proceedings must elect between the "federal" and the "state"

exemption scheme. In re Dyke, 943 F.2d 1435, 1438 (5th Cir.1991). As a general rule, election

of the state exemption scheme permits the debtor to claim the general exemptions contained in the

Texas Property Code, while election of the federal scheme relegates the debtor to the exemptions

specified in section 522(d) of the Bankruptcy Code. In re Goff, 706 F.2d 574, 579 (5th

Cir.1983). "The debtor cannot elect the most favorable exemptions in each scheme: he must

weigh the advantages of each scheme and then choose one or the other." Dyke, 943 F.2d at 1438.

3 The bankruptcy court attempted to buttress this conclusion with supplemental findings of fact

and conclusions of law entered on December 27, 1988, in which it found that (1) a 114.47 acre

portion of Paigebrooke Farm was vacant development property and (2) the Bradleys had

expressed their intent to use only fifteen acres of the farm as their homestead.

4 To the extent that the urban homestead does not exceed one acre, the urban homestead

encompasses the land on which the economic head of the family exercises her business or calling.

See McSwain, The Texas Business Homestead in 1990, 42 Baylor L.Rev. 657, 659 (1990).

5 Prior to 1983 amendments to the Texas Property Code, debtors could only exempt a

maximum of $10,000 of the value of their urban homestead. This monetary exemption is no

longer available—even to urban homesteads created before 1983. The 1983 amendments, which

permit Texas debtors with urban homesteads to exempt up to an acre of land, apply retroactively.

Tex.Prop.Code Ann. § 41.002(d) (Vernon Supp.1991) ("The definition of a homestead as Electing the state exemption scheme authorized in the Bankruptcy C ode, 2 Bradley claimed a rural

homestead in all 129.27 acres of Paigebrooke Farm. Because Texas law does not permit creditors

to satisfy their claims through forced sale of a homestead, Bradley requested that the bankruptcy

court disallow Seguin Savings' secured claim against Paigebrooke Farm. On December 12, 1988, the

bankruptcy court entered findings o f fact and conclusions of law. The court concluded that

Paigebrooke Farm indeed was rural in character and that Bradley had neither alienated nor abandoned

her homestead rights to the property. The court further concluded, however, that the debtor could

claim only fifteen acres of the farm as her rural homestead. 3 On November 26, 1990, the district

court affirmed these conclusions. 121 B.R. 306.

II. DISCUSSION

Texas law recognizes both urban and rural homesteads. If a debtor uses land as "an urban

home or as a place to exercise a calling or business in the same urban area," then the debtor is entitled

to claim up to an acre of the land, in one or more tracts, as an urban homestead. 4 Tex.Prop.Code

Ann. § 41.002(a) (Vernon Supp.1991). S ee also Tex. Const. art. XVI, § 51. 5 If a debtor uses landprovided in this section applies to all homesteads in this state whenever created."). See also In re

Webb, 954 F.2d 1102, 1107 (5th Cir.1992).

6 A debtor with a family is entitled to claim a rural homestead consisting of no more than two

hundred acres. Tex.Prop.Code Ann. § 41.002(b)(1). A single adult debtor, on the other hand, is

entitled to claim a rural homestead consisting of no more than one hundred acres. Id. §

41.002(b)(2).

Unlike the urban homestead, see supra note 4, the rural homestead does not

encompass a "business homestead," and indeed, the operation of a business on part of a

rural homestead forfeits the homestead protection on that part of the property. O'Brien v.

Woeltz, 94 Tex. 148, 58 S.W. 943, 945 (1900). Aside from business operations, however,

the rural homestead does include all land—up to the limit of two hundred acres—that is

used for the support of the debtor and her family. See Clark v. Salinas, 626 S.W.2d 118,

120 (Tex.App.—Corpus Christi 1981, writ ref'd n.r.e.); Sims v. Beeson, 545 S.W.2d 262,

263 (Tex.Civ.App.—Tyler 1977, writ ref'd n.r.e.). "for the purposes of a rural home," then the debtor is entitled to claim up to two hundred acres of the

land, in one or more tracts, as a rural family homestead. 6 Tex.Prop.Code Ann. § 41.002(b) (Vernon

Supp.1991). S ee also Tex. Const. art. XVI, § 51. In either instance, the Texas homestead is exempt

from forced sale "except for the purchase money thereof, or a part of such purchase money, the taxes

due thereon, or for work and material used in constructing improvements thereon." Tex. Const. art.

XVI, § 50.

Bradley contends that the bankruptcy court, as well as the district court, erred in limit ing her

to a fifteen acre homestead. She argues that, under Texas law, she is entitled to claim all 129.47 acres

of Paigebrooke Farm as her rural homestead. On appeal of a bankruptcy proceeding, this Court

applies a two level standard of review. We review the factual findings of the bankruptcy court under

the "clearly erroneous" standard. I n re Niland, 825 F.2d 801, 806 (5th Cir.1987). According to this

deferential standard, we should overturn the factual findings of the bankruptcy court only when, after

review of all the evidence, we are left with a "firm and definite conviction" that the bankruptcy court

committed a mistake. U

nited States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525,

542, 92 L.Ed. 746 (1948). Unlike factual findings, however, we review the legal conclusions of the

bankruptcy court under the less deferential de novo standard. I n re Missionary Baptist Foundation,

712 F.2d 206, 209 (5th Cir.1983). Thus, if a bankruptcy court premises a finding of fact upon an7 To interpret state homestead rights, this Court must, of course, look to state law. See In re

Moody, 77 B.R. 580, 590 (S.D.Tex.1987), aff'd, 862 F.2d 1194 (5th Cir.1989).

8 Once gained, homestead rights are not easily lost. "The only way for property to lose its

homestead, after it has been dedicated as a homestead, is by death, abandonment or alienation." improper legal standard, the finding of fact "loses the insulation of the clearly erroneous rule." Id.

The de novo standard requires that this Court conduc t an independent analysis of Texas

homest ead law. S ee Salve Regina College v. Russell,

––– U.S.

––––, 111 S.Ct. 1217, 1221, 113

L.Ed.2d 190 (1991). 7 Because homesteads are favorites of t he law, we must give a liberal

construction to the constitutional and statutory provisions that protect homestead exemptions. S ee

Tolman v. Overstreet, 590 S.W.2d 635, 637 (Tex.Civ.App.—Tyler 1979, no writ); K unkel v. Kunkel,

515 S.W.2d 941, 946 (Tex.Civ.App.—Amarillo 1974, writ ref'd n.r.e.); G arrett v. Katz, 23 S.W.2d

436, 438 (Tex.Civ.App.—Dallas 1929), modified on o ther grounds, 27 S.W.2d 373

(Tex.Civ.App.—Dallas 1930, no writ). Indeed, we must uphold and enforce the Texas homestead

laws even though in so doing we might unwittingly "assist a dishonest debtor in wrongfully defeating

his credi tor." C ocke v. Conquest, 120 Tex. 43, 35 S.W.2d 673, 678 (1931). Mindful of these

principles, we turn to the substance of this case.

A. Initial Burden of Proof

It is well settled in Texas that an individual who seeks homestead protection has the initial

burden to establish the homestead character of her property

. L ifemark Corp. v. Merritt, 655 S.W.2d

310, 314 (Tex.App.—Houston [14th Dist.] 1983, writ ref'd n.r.e.). To meet this initial burden of

proof, t he claimant must "show a combination of both overt acts of homestead usage and the

intention on the part of the owner to claim the land as a homestead." Sims v. Beeson, 545 S.W.2d

262, 263 (Tex.Civ.App.—Tyler 1976, writ ref'd n.r.e.). Once the claimant has established the

homestead character of her property

, the burden shifts to the creditor to disprove the continued

existence of the homestead. S ee Sullivan v. B arnett, 471 S.W.2d 39, 43 (Tex.1971); L ifemark

Corp., 655 S.W.2d at 314. 8Garrard v. Henderson, 209 S.W.2d 225, 229 (Tex.Civ.App.—Dallas 1948, no writ).

9 Evidence of objective intent might be material in cases in which specific circumstances raise

the issue. See Braden Steel Corp. v. McClure, 603 S.W.2d 288, 293 (Tex.Civ.App.—Amarillo

1980, no writ). For example, if a rural family homestead claimant owns several two hundred acre

tracts of land, all of which the claimant uses for homestead purposes, then evidence of intent is

material to determine which of the tracts is the homestead. Similarly, if a rural family homestead

claimant owns a single four hundred acre tract of land, all four hundred acres of which the

claimant uses for homestead purposes, then evidence of intent is material to determine which two

hundred acres of the tract is the homestead. No such circumstances, however, are evident in the

instant case. The init ial burden to establish the homestead character of property is a short hurdle. In the

usual case, mere evidence of "overt acts of homestead usage" is sufficient to meet this burden. As

long as the claimant can demonstrate that she has used her property for homestead purposes, then

t he Texas courts will presume that the homestead claimant possesses the requisite intent. See

Youngblood v. Youngblood, 124 Tex. 184, 76 S.W.2d 759, 761 (1934). "Possession and use of land

by one who owns it and who resides upon it makes it the homestead in law and in fact. " F irst

Interstate Bank v. Bland, 810 S.W.2d 277, 286 (Tex.App.—Fort Worth 1991, no writ) (emphasis

added). S ee also Lifemark Corp., 655 S.W.2d at 315 ("[I]nvestigation of intention need not be made

when the land is actually put to homestea d use. Such actual use is the most satisfactory and

convincing evidence of intention."). 9

In the instant case, Bradley demonstrated that she and her family have used all 129.47 acres

of Paigebrooke Farm for homestead purposes. As the bankruptcy court acknowledged in its findings

of fact, Bradley and her family live in a house on the property and have used the entire farm to grow

hay and raise livestock. Findings of Fact at 3. The Texas courts have routinely held that use of

property for farming or ranching purposes, accompanied by occupancy of the property

, is sufficient

to imbue the property with a homestead character. S ee Fajkus v. First National Bank, 735 S.W.2d

882, 884 (Tex.App.—Austin 1987, writ denied) (grazing of cattle is use of property for homestead

purposes); C lark v. Salinas, 626 S.W.2d 118, 120 (Tex.App.—Corpus Christi 1981, writ ref'd n.r.e.)

(cultivation of crops is use of property fo r ho mestead purposes). Accordingly, we conclude that

Bradley has satisfied her burden to establish the homestead character of her farm as a matter of law.10 We are somewhat troubled with the bankruptcy court's characterization of the 114.47 acre

portion of the farm as "vacant." While there were no improvements on this portion of

Paigebrooke Farm, the record clearly indicates that this acreage was occupied and used to support

farming and ranching activities. To the extent this finding that the 114.47 acre portion was

"vacant" was meant to supplant the bankruptcy court's initial finding that Bradley used the land to

grow hay and raise cattle, it is clearly erroneous.

11 To abandon a homestead, the owner of the property must evince a "present, definite and

permanent intent to cease use of the property for homestead purposes." West Texas State Bank v.

Helms, 326 S.W.2d 47, 49 (Tex.Civ.App.—Eastland 1959, no writ). If a property owner uses

part of his homestead property for purposes inconsistent with the homestead laws, then the owner

has effectively abandoned that part of the homestead. See Uvalde Rock Asphalt Co. v. Warren,

127 Tex. 137, 91 S.W.2d 321, 323 (1936); Massillon Engine & Thresher Co. v. Barrow

, 231

S.W. 368, 370 (Tex.Comm'n App.1921, judgm't adopted); Ray v. Metzger, 165 S.W.2d 207, 210

(Tex.Civ.App.—Fort Worth 1942), aff'd, 141 Tex. 372, 172 S.W.2d 480 (1943); Scottish

American Mortgage Co. v. Milner, 30 S.W.2d 582, 584 (Tex.Civ.App.—Texarkana 1930, writ

ref'd). In this case, the bankruptcy court expressly concluded that Bradley never abandoned her

homestead rights in the farm. Findings of Fact at 3. The creditor on appeal does not dispute this

finding. Despite the fact that Bradl ey est ablished her homestead rights in Paigebrooke Farm as a

matter of law, the bankruptcy court limit ed her homestead rights to fifteen acres. According to the

bankruptcy court, the evidence indicated that Bradley and her husband intended to use only fifteen

acres o f Paigebrooke Farm as her homestead. To support this conclusion, the bankruptcy court

emphasized (1) that the remaining 114.47 acre porti on of the farm was "vacant" property which the

Bradleys held for investment and development purposes an d (2) t hat the Bradley s executed a

disclaimer in which they represented that the remaining 114.47 acres was not part of their homestead.

While we do not necessarily dispute the truth of these two findings, 10 we cannot conclude that these

findings are relevant. As we have noted, t he evidence that Bradley used Paigebrooke Farm for

homestead purposes obviates consideration of any evidence that she did not intend to claim all o f it

as her homestead. See Lifemark Corp., 655 S.W.2d at 315.

The finding that Bradley held 114.47 acres of Paigebrooke Farm open for development does

not support the severance of this acreage from her homestead. Unless the claimant has abandoned

part of the homestead, 11 Texas law does not favor the severance of a single contiguous tract of land

into homestead and non-homestead sections. S ee Youngblood v. Youn gblood, 124 Tex. 184, 76

S.W.2d 759, 760 (1934) (contiguity of parcels presents a situation favorable to the extension of the12 See supra note 11.

13 The mere attempt to sell or develop land reflects, at best, the intent to abandon a homestead

in the future. An intent to abandon land in the future does not divest the land of its homestead

character. Bass v. Ware, 203 S.W.2d 1001, 1002 (Tex.Civ.App.—Waco 1947, writ ref'd n.r.e.). homestead to the outside boundaries of the land); V aughn v. Vaughn, 279 S.W.2d 427, 435

(Tex.Civ.App.—Texarkana 1955, writ ref'd n.r.e.) (same). Absent abandonment, the severance of

a tract of land from the homestead is permissible only if there is no evidence that the severed tract is

used for homestead purposes. S ee O' Brien v. Woeltz, 94 Tex. 148, 58 S.W. 943, 945 (1900);

McDonald v. Clark, 19 S.W. 1023, 1025 (Tex.1892); P rince v. North State Bank, 484 S.W.2d 405,

410 (Tex.Civ.App.—Amarillo 1972, writ ref'd n.r.e.); F e rguson v. Smith, 206 S.W. 966, 967

(Tex.Civ.App.—Dallas 1918, writ ref'd). B ut see Massillon Engine & Thresher Co. v. Barrow, 231

S.W. 368, 370 (Tex.Comm'n App.1921, judgm't adopted) (law implies constructive use of entire tract

until there is use inconsistent with the homestead laws). In thi s case, where the debtor has

conclu sively demonstrated that she used all 129.47 acres of Paigebrooke Farm for homestead

purposes, Texas law does not permit severance.

We might have reached a different conclusion if Bradley had successfully sold or leased part

of Paigebrooke Farm for commercial or residential development. In such an event, Bradley would

have abandoned that part of the farm. 12 The record here reveals, however, that the Bradleys did not

realize their intentions to develop part of Pa igebrooke Farm

. U nsuccessful attem

pts to sell or

develop property do not "deprive it of its homestead character." West Texas State Bank v. Helms,

326 S.W.2d 47, 49 (Tex.Civ.App.—Eastland 1959, no writ). S ee also Sullivan, 471 S.W.2d at 43;

West v. Austin Nat'l Bank, 427 S. W.2d 906, 912 (Tex.Civ.App.—San Antonio 1968, writ ref'd

n.r.e.). 13 Because Bradley did not actually sell or lease Paigebrooke Farm for commercial or

residential development, her attempt to develop the farm does not defeat her homestead rights in the

entire farm. S ee Gaar, Scott & Co. v. Burge, 49 Tex.Civ.App. 599, 110 S.W. 181, 183 (1908) ("an

intention to sell the homestead and efforts in that direction, and an intention to remove from it in case

a sale is made, may coexist with an intention to remain and continue to occupy the homestead").14 See infra section II.B.

Likewise, the fact that Bradley executed a document disclaiming her homestead rights in part

of Paigebrooke Farm does not eliminat e her homestead rights in the entire farm. Under Texas law,

a homestead disclaimer, while effective in circumstances that would estop a claimant from asserting

the homestead right, 14 is irrelevant in the determination whether the claimant has satisfied her init ial

burden of proof. S ee Bland, 810 S.W.2d at 283; E nglander Co. v. Kennedy, 424 S.W.2d 305, 308

(Tex.Civ.App.—Dallas), writ ref'd per curiam, 428 S.W.2d 806 (Tex.1968). A homestead disclaimer

cannot "change the character of the true homestead." City Central Bank & Trust Co. v. Byrne, 47

S.W.2d 432, 434 (Tex.Civ.App.—San Antonio 1932, writ ref'd). As long as the claimant has

occupied the property in question and used it for homestead purposes, then an attempted homestead

disclaimer will not preclude her from claiming the homestead exe mption. R ay v. Metzger, 165

S.W.2d 207, 209 (Tex.Civ.App.—Fort Worth 1942), aff'd, 141 Tex. 372, 172 S.W.2d 480

(Tex.1943). In this case, as we have noted, it is clear that Bradley has occupied all 129.47 acres of

Paigebrooke Farm and used it for homestead purposes.

In sum, then, Bradley has established the homestead charac ter of Paigebrooke Farm as a

matter of law. She has demo nst rat ed that she occupies a house on the farm and that she uses the

entire farm for homestead purposes. Neither the fact that Bradley attempted to hold the farm open

for development purposes nor the fact that Bradley executed a disclaimer of her homestead rights in

part of the pro perty alter this showing. Therefore, Bradley cannot be foreclosed from claiming a

homestead exemption in all 129.47 acres of Paigebrooke Farm.

B. Estoppel

Creditor Pacific Southwest argues that, even if this Court concludes that Bradley satisfied

her init ial burden to establish her homestead rights in all 129.47 acres of Paigebrooke Farm, Bradley

should be estopped from claiming a homestead right in the vacant 114.47 acre section of the farm.

Pacific Southwest contends that Bradley's homestead disclaimer, in which the debtor represented that15 The Bland court observed that this rule of law rests "on the theory that the fact of actual

possession and use of the property as a home is of so obvious a nature that the lender cannot

close his eyes to the facts." 810 S.W.2d at 283. the 114.47 ac re section was not part of her homestead, estops her from invoking her state

constitutional and statutory homestead rights because Pacific Southwest has relied on her disclaimer

to its detriment.

In In re Niland, 825 F.2d 801 (5th Cir.1987), t his Court rejected a similar argument. The

debtor in In re Niland, like Bradley in the instant case, had executed a disclaimer of his homestead

rights after he had obtained a loan secured by a deed of trust on his property. The creditor argued

that the debtor's misrepresentation of his homestead rights estopped the de b tor from claiming the

property as his homestead. The Court, however, reasoned that "a homestead claimant is not estopped

to assert his homestead rights in property on the basis of declarations made to the contrary if, at the

time of the declarations, the claimant was in actual use and possession of the property." Id. at 808.

Finding that the debtor indeed was in actual use and possession of his property at the time he

misrepresented his homestead rights, the Court con cluded that the debtor was not estopped from

claiming the property as his homestead. Id. at 810.

Recently, in First Interstate Bank v. Bland, 810 S.W.2d 277 (Tex.App.—Fort Worth 1991,

no writ), the Fort Worth Court of Appeals confirmed that a debtor who establishes homestead rights

as a matter of law cannot be estopped from claiming her homestead exemption. "When the facts of

actual poss essio n and use are coupled with the interest in the property held by the borrower, the

premises become a homestead in fact and in law.... A lender stands charged with notice of the fact

of homestead and it matters not what declarations to the contrary the borrower might make." I d. at

283–84. 15

As recognized in Niland and reiterated in Bland, lenders are subject to a duty of inquiry. If

the circum st ances were such that a lender should have known or suspected that a homestead16 The Bland court recognized only two situations in which a disclaimer will estop the debtor

from claiming homestead rights: (1) at the time of the disclaimer, the debtor owned two or more

noncontiguous pieces of property, either of which—but not both—could constitute the

homestead; and (2) at the time of the disclaimer, the property described in the disclaimer is not

being used for homestead purposes. 810 S.W.2d at 284. Neither of these situations pertains

here. Although the Bradleys owned several tracts of land in north Texas, the evidence reveals

that none of these tracts could have supported a homestead exemption—that is, the Bradleys did

not have a home on any of these tracts.

17 Bradley and her husband have made other homestead disclaimers besides the one they made

to Seguin Savings. For example, in the 1977 partnership agreement, Bradley and her husband

stated that they would occupy as their homestead only the fifteen acres on which their home and

related ranch buildings were located. This 1977 agreement perhaps was executed before the

Bradleys began to use the vacant 114.47 acres of Paigebrooke Farm for homestead purposes. If

so, then the agreement might estop the Bradleys from claiming homestead rights against a lender

who relied on this particular agreement. See In re Niland, 825 F.2d at 808. Seguin Savings,

however, did not rely on this 1977 agreement. Rather, the evidence indicates that if Seguin

Savings relied on any homestead disclaimer, it relied upon the disclaimer that the Bradleys

executed when they obtained their 1985 loan from Seguin Savings. disclaimer was false, then the Texas courts will not enforce the disclaimer against the debtor. 16 This

rule would appear to be unfair to lenders and creditors—allowing debtors to mislead lenders about

the extent of their homestead rights in order to obt ain lo ans. No netheless, Texas law places this

burden on the lender. "To hold otherwise would practically abrogate the [Texas] Co nst it ut ion."

Texas Land & Loan Co. v. Blalock, 76 Tex. 85, 13 S.W. 12, 13 (1890). S ee In re Niland, 825 F.2d

at 809 ("This rule is

... based on a recognition that many in financial difficult ies will sign anything to

obtain money from lenders, and that if not put to a duty of inquiry, many lenders will simply have the

borrower execute a form affidavit stating that the property is not claimed as homestead.").

In the instant case, the circumstances were such that Pacific Southwest's predecessor, Seguin

Savings, should have known or suspected that Bradley's homestead disclaimer was false. At the time

that Bradley represented t o Seguin Savings that she did not have homestead rights in the vacant

114.47 acres of Paigebrooke Farm, Bradley and her family lived in a house on the farm and was using

the entire farm—including the 114.47 acre section—for homestead purposes. 17 Since the available

facts indicated that Bradley was occupying and using all 129.47 acres of Paigebrooke Farm as her

homestead, her contrary declaration does not estop her from claiming the homestead exemption.18 Section 41.002(c) of the Texas Property Code is a new addition to the Texas Property Code.

The Texas legislature added this definition in 1989 as part of its function to implement the

homestead provisions in the Texas Constitution. See In re Moody, 862 F.2d 1194, 1201 (5th

Cir.1989) ("The Texas Constitution is logically viewed as an enabling act, with the statute as its

implementation ..."). To the extent that it applies, it governs even those homesteads created

before 1989. Tex.Prop.Code Ann. § 41.002(d) (Vernon Supp.1991).

The Texas Constitution states that "the homestead in a city, tow n or village shall

consist of lot or lots amounting to not more than one acre of land." Tex. Const. art. XVI,

§ 51 (emphasis added). One commentator has suggested that, because the constitution

seems to define the urban homestead with reference to the location of city limits, the

legislature might have abused its authority in asserting a different definition of the urban

homestead in section 41.002(c). McSwain, supra note 4, at 661. The state constitution,

though, does not define the term "in a city, town or village." Nor does the constitution

attempt to determine when a homestead is urban and when a homestead is rural. When

given the power to implement constitutional provisions, as it has with respect to the

homestead laws, "the legislature may define terms which are not defined in the constitution

itself, provided its definitions constitute reasonable interpretations of the constitutional

language and do not do violence to the plain meaning and intent of the constitutional

framers." Sw earingen v. City of Texarkana, 596 S.W.2d 157, 160 n. 1

(Tex.Civ.App.—Texarkana 1979, writ ref'd n.r.e.). The definition in section 41.002(c) of

the Property Code is a reasonable interpretation of the constitutional language and does

not do violence to the intent of the constitutional framers.

It is unclear whether section 41.002(c) applies in all homestead disputes. At the

least, the definition of "homestead" in section 41.002(c) applies in cases, like the instant

case, involving the threatened foreclosure of homestead property. See Debate on

Tex.S.B. 642, 71st Leg. (May 1989) (remarks of Sen. Parker) ("A question occurred as to

exactly what we meant on homestead on this—in this foreclosure provision and this

clarifies the term "homestead.' "). Some language in the legislative history of this section,

however, suggests that section 41.002(c) might not displace the traditional common law

definition of "homestead" in all cases. Under the traditional analysis, the Texas courts

examine several factors to determine whether a homestead is rural or urban: (1) the C. Rural Character of the Homestead Property

Pacific Southwest argues that, even if this Court should conclude that Bradley is not estopped

from claiming homestead rights in all 129.47 acres of Paigebrooke Farm, this Court should still affirm

the bankruptcy court on the basis that Bradley cannot claim a rural homestead in the property

. Pacific

Southwest claims that because Paigebrooke Farm is located within the city limit s of Westlake, Texas,

Bradley can only claim an urban homestead of one acre. S ee Tex.Prop.Code Ann. § 41.002(a)

( Verno n Supp.1991). This argument fails. City limit signs do not determine the urban or rural

character of a homestead. Instead, according to the Texas Property Code, "[a] homestead is

considered to be rural if, at the time the designation is made, the property is not served by municipal

utilities and fire an d police protection." I d. § 41.002(c). 18 At the time that Bradley began to uselocation of the land with respect to the limits of the municipality; (2) the situs of the lot in

question; (3) the existence of municipal utilities and services; (4) the use of the lot and

adjacent property; and (5) the presence of platted streets, blocks, and the like. See

Vistron Corp. v. Winstead, 521 S.W.2d 754, 755 (Tex.Civ.App.—Eastland 1975, no

writ); Rockett v. Williams, 78 S.W.2d 1077, 1078 (Tex.Civ.App.—Dallas 1935, writ

dism'd); Purdy v. Grove, 35 S.W.2d 1078, 1081–82 (Tex.Civ.App.—Eastland 1931, writ

ref'd); see also 43 Tex.Jur.3d Homesteads § 15 (1985) (and cases cited therein). The

availability of municipal utilities and services is merely one factor in this traditional

analysis. Paigebrooke Farm as her homestead, the farm received no utility or other municipal services from the

City of Westlake. Therefore, Paigebrooke Farm is a rural homestead, and Bradley is entitled to claim

up to two hundred acres as her rural family homestead exemption. See id. § 41.002(b)(1).

III. CONCLUSION

Under Texas law, debtor Bradley is entitled to rural family homestead protecti on covering all

1 29.47 acres of Paigebrooke Farm. The judgment of the courts below is reversed and the case is

remanded to the district court for further bankruptcy proceedings consistent with this opinion.

REVERSED AND REMANDED.