Introduction to Texas Homestead Law
What is Homestead
In Texas, "homestead" is a legal status for real property created by the constitution. Homestead generally consists of the home, fixtures and land that a person occupies as a residence. Either separate or community property may constitute a homestead. Homestead rights have historically enjoyed very strong protection in Texas.
The urban homestead is limited to ten acres. More than one lot may be designated as homestead provided that the lots are contiguous and all the lots taken together do not exceed the ten acre limitation. In addition, an urban homestead may be used for business purposes provided it is also used for an urban home.
In contrast, rural homesteads are limited to 200 acres for a family, or 100 acres for a single adult.
How is Homestead Created?
To establish a homestead, the person claiming homestead protection must show a combination of (1) intent to use the land as his or her home and (2) overt acts consistent with usage of the land as a home. Because homestead rights are liberally construed, land can become homestead before the owner even "breaks ground" to build a residence there. However, a person can only have one homestead at a time.
Contrary to popular belief, there is no requirement to file anything of record to establish homestead. This myth stems from the requirement to file an Application for Residential Homestead Exemption (PDF) to take advantage a reduction in property taxes. While it is obviously desirable to take advantage of all available tax exemptions, a person can still have homestead rights in land without filing for the homestead tax exemption.
Sometimes a homeowner is requested to execute an affidavit indicating whether the person intends for a particular parcel to be homestead. Such affidavits are frequently used to resolve uncertainty, such as when the person owns multiple residential properties, or when the person's home is situated on a parcel of land that is larger than the maximum homestead size. Such affidavits simply serve to clarify the person's intent; they are not required to establish the homestead.
How is Homestead Terminated?
Property that has been designated as a homestead will only lose that character through abandonment, death, or transfer. A temporary absence from the home will not end homestead protection provided the owner does not establish another homestead elsewhere. Evidence establishing the abandonment of a homestead must be undeniably clear that there has been a total abandonment with an intention not to return.
What is the Effect of Homestead?
The State of Texas famously recognizes one of the broadest homestead exemptions in the United States. See Jerry Patterson, Home Equity Reform in Texas, 26 St. Mary's L.J. 323, 324 (1994) ("the concept of Texas homestead protection has grown to near-mythical proportions"). Accordingly, homestead rights protect property from all but the few types of constitutionally permitted liens that may be imposed against a homestead. For example, homesteads are protected from forced sale for the payment of debts, except for debts incurred for purchase money on the homestead, taxes on the homestead, valid mechanic's liens for work or services performed on the homestead, certain extensions of credit such as a home equity loan, and certain reverse mortgages. A Texas homestead is not, however, secure from seizure for a debt owed to the federal government, or from an encumbrance existing on land prior to its dedication as a homestead.
Generally, both spouses must join in any transaction to transfer or encumber homestead. In addition, homestead status affects the disposition of property upon death. For example, a surviving spouse and minor (or unmarried) children may be entitled to continue to occupy a homestead even if the decedent's Will says otherwise.
Finally, as referenced above, the value of homestead may be discounted for purposes of computing ad valorem taxes.
Roberts & Roberts, LLP
Roberts & Roberts is a Killeen, Texas law firm which provides legal services in the fields of real estate, probate, estate planning, business and family law. If you need an attorney in Killeen or the surrounding area, we would welcome the opportunity to assist you. Please contact our friendly staff at your convenience.