Texas Homestead Law

Author: October 11, 2017

Property Division In Texas

Homestead protection laws in Texas are designed to help people in the event of a foreclosure, death of a loved one, or any change in economic circumstances that an individual may face. What is a homestead and who is entitled to a homestead protection? Let’s see.

What is a Homestead?

In order to discuss homestead protections, one must first understand what a homestead is. In the legal field, a homestead is defined as the house, outbuildings, and adjoining land owned and occupied by a person or family as a residence. Chapter 41 of the Texas Property Code differentiates homesteads as being urban or being rural. The Code states determines if the homestead is urban or rural based on the following:

(a) If used for the purposes of an urban home or as both an urban home and a place to exercise a calling or business, the homestead of a family or a single, adult person, not otherwise entitled to a homestead, shall consist of not more than 10 acres of land which may be in one or more contiguous lots, together with any improvements thereon.

(b)  If used for the purposes of a rural home, the homestead shall consist of:

  1. for a family, not more than 200 acres, which may be in one or more parcels, with the improvements thereon; or
  2. for a single, adult person, not otherwise entitled to a homestead, not more than 100 acres, which may be in one or more parcels, with the improvements thereon.

(c)  A homestead is considered to be urban if, at the time the designation is made, the property is:

  1. located within the limits of a municipality or its extraterritorial jurisdiction or a platted subdivision; and
  2. served by police protection, paid or volunteer fire protection, and at least three of the following services provided by a municipality or under contract to a municipality:

(A)  electric;

(B)  natural gas;

(C)  sewer;

(D)  storm sewer; and

(E)  water.

(d)  The definition of a homestead as provided in this section applies to all homesteads in this state whenever created.

Note, Texas no longer provides a homestead exemption to businesses exclusively; instead, the statute allows the urban classification to apply to both home and businesses. Texas courts have repeatedly determined that the homestead lies on the intent of how the individual plans to use the property even though the individual does not necessarily have to reside on the property.

Texas Homestead Protections

Now that it is established what a homestead is, it is proper to discuss what protections it extends.

Establishing a homestead extends the following protections: Creditor Protection before and after death; Special occupancy rights for surviving spouses and minor children; and Tax Savings.

Creditor Protection Before and After Death

According to the Texas Constitution and Section 270 of the Texas Probate Code, 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 exceptions listed by the Code.

The homestead is not liable for the payment of any of the debts of the estate, other than:

  1. purchase money for the homestead;

  2. taxes due on the homestead;

  3. work and material used in constructing improvements on the homestead if the requirements of Section 50(a)(5), Article XVI, Texas Constitution, are met;

  4. an owelty of partition imposed against the entirety of the property by a court order or written agreement of the parties to the partition, including a debt of one spouse in favor of the other spouse resulting from a division or an award of a family homestead in a divorce proceeding;

  5. the refinance of a lien against the homestead, including a federal tax lien resulting from the tax debt of both spouses, if the homestead is a family homestead, or from the tax debt of the decedent;

  6. an extension of credit on the homestead if the requirements of Section 50(a)(6), Article XVI, Texas Constitution, are met; or

  7. a reverse mortgage.

The most notable exceptions are debts incurred by purchase money liens; ad valorem taxes (a tax lien that attaches automatically every year to all property on which property taxes are owed); mechanic’s and materialmans’s liens; owelty of partition liens (in the event of an unequal division of co-tenancy property); home equity loans; reverse mortgages; and preexisting liens.

Special Occupancy Rights for Surviving Spouses and Minor Children

Upon the death of a spouse, Texas law protects surviving spouses and minor children for the partition of the home. According to Section 102.005 of the Texas Probate Code,

The homestead may not be partitioned among the decedent’s heirs:

  1. during the lifetime of the surviving spouse for as long as the surviving spouse elects to use or occupy the property as a homestead; or

  2. during the period the guardian of the decedent’s minor children is permitted to use and occupy the homestead under a court order.

Establishing a homestead provides the spouse and minor children protection from the partition of the homestead according to the statute listed above.

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