Opinion ID: 666003
Heading Depth: 3
Heading Rank: 1

Heading: Texas Homestead Law

Text: 7 The homestead exemption is the well-known provision of Texas law that protects certain real property interests from foreclosure and forced sale for the payment of debts, with very few exceptions. The exemption is guaranteed in the Texas Constitution, which provides in pertinent part: 8 The homestead of a family, or of a single adult person, shall be, and is hereby protected from forced sale, for the payment of all debts 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.... No mortgage, trust deed, or other lien on the homestead shall ever be valid, except for the purchase money therefor, or improvements made thereon, as hereinbefore provided.... 9 TEX. CONST. art. XVI, Sec. 50; see also TEX.PROP.CODE ANN. Sec. 41.001 (West Supp.1994) (mirroring the provisions of TEX. CONST. art. XVI, Sec. 50). The Texas Constitution further establishes that the key defining feature of a homestead is that the property is used for the purposes of a home, or as a place to exercise the calling or business of the homestead claimant, whether a single adult person, or the head of a family. TEX. CONST. art. XVI, Sec. 51. A person claiming homestead rights in property has the burden of proving both overt acts of homestead usage and intent to claim the land as a homestead. Kennard v. MBank Waco, N.A. (In re Kennard), 970 F.2d 1455, 1458 (5th Cir.1992); see also Gregory v. Sunbelt Sav., F.S.B., 835 S.W.2d 155, 158 (Tex.App.--Dallas 1992, writ denied) (The homestead character of property can be established prior to actual occupancy when the owner intends to improve and occupy the premises as a homestead.). It should be noted that this protection by no means embraces all of a home owner's property; the exemption may be claimed on a maximum of 200 acres of land and improvements in rural areas or one acre of land and improvements in a city, town, or village. TEX. CONST. art. XVI, Sec. 51. 10 Strong legal protection of the homestead from foreclosure has long been viewed as an important public policy in Texas. As Chief Justice Hemphill of the Texas Supreme Court once wrote, 11 The object of such exemption is to confer on the beneficiary a home as an asylum, a refuge which cannot be invaded nor its tranquility or serenity disturbed, and in which may be nurtured and cherished those feelings of individual independence which lie at the foundation and are essential to the permanency of our institutions. 12 Wood v. Wheeler, 7 Tex. 13, 22 (1851). As the banks correctly point out, however, this protection is not cost-free. The homestead exemption effectively prevents home owners from converting their home equity into liquid assets through secured borrowing. See 2 GEORGE D. BRADEN ET AL., THE CONSTITUTION OF THE STATE OF TEXAS: AN ANNOTATED AND COMPARATIVE ANALYSIS 790 (no date) (noting that the homestead exemption effectively prevents mortgaging the homestead to meet a financial emergency; the only source of funds thus may be outright sale of the homestead). The banks are of the view that lending institutions also bear part of the cost of Texas' homestead laws because those laws prevent them from engaging in certain mortgage lending activities.