Homestead Flashcards
Homestead
Place of residence or business which is secured against the rights of creditors
A Tx homestead interest is a property right in the nature of an estate in land rather than merely an exemption from creditors
May be rural or urban
Who can establish homestead?
Claimed by a single adult or a family
Just need some present right of possession (e.g. leasehold, life estate)
(i) intent to have it as your homestead; and
(ii) actual occupation (or acts of preparation showing that you intended it to be your home).
A person incapable of forming the legal intent to establish a homestead may, if able to reside on the property, have a guardian establish a homestead
*Actions Required to Establish Homestead
Must intend for property to be a homestead or must take actions for preparation and prompt occupation of the property that would give notice of dedication
-Mere intention is insufficient, must be overt acts of preparation and occupation
- Actual use of the property as homestead is the most convincing E of intention, but mere fact of living on property ≠ homestead
- Formal designation not required
*just because you leave for a temporary work visit does not mean you abandon homestead.
Property Constituting Homestead - Personal Property
Basic concept of homestead is that of a possessory and protected interest in land
Personal property that has been attached to the land so as to become permanent accession to the freehold (i.e., fixture) will also acquire homestead character
*Rural Homestead
May consist of not more than 200 acres for a FAMILY and not more than 100 acres for a SINGLE
Acreage does not have to be contiguous as long as one tract is used as the residence and other tracts are used in connection w/ the home place for support of the family
If family owns a number of separate tracts that do not amount to 200 acres, only those tracts that are actually used as homestead will be exempt
*Urban Homestead
Used for the purposes of an urban home or as both an urban home and place of business
May not consist of more than 10 acres of land which may be in one or more contiguous lots
Lots ≠ artificial subdivisions of city property
Business Homestead as Part of Urban Homestead
Urban homestead can include property used as place of business to provide for a family or single adult who is not a member of a family
Must be either on the same lot as the residence or on a contiguous lot
Total amount of residence and biz cannot exceed 10 acres
- tested frequently: What are the only liens that can attach to homestead property?
What are the only liens that can attach to homestead property?
- purchase money
- taxes
- MML for improvements*
- owelty of partition judgments
- refinancing of an otherwise permissible lien
- home equity loans and lines of credit
- reverse mortgages
- refinance of a chattel mortgage with the mortgage of land
*A previously acquired lien cannot be subsequently defeated by a debtor’s voluntary act in making the property a homestead
Homestead and Encumbrances for Purchase Money
Homestead exemption does not apply against the person to whom the purchase money is due
A renewal, extension, or adjustment of a purchase money lien on a homestead property is enforceable against the homestead only to the extent of the original purchase money encumbrance. Any additional indebtedness is protected by the prohibitions against forced sale
*Homestead and Liens for Taxes
Homestead property is liable for the satisfaction of real property ad valorem taxes assessed and levied by the state and its political subdivisions
Certain fed tax liens are also included as permissible encumbrances by virtue of state statute. The lien does not become invalid and unenforceable in the hands of a 3P who finances a loan to discharge the lien
*Homestead and Labor and Materials in Construction of Improvements
Tx homesteads have always been subject to forced sale for loans made in connection w/ improvement to the property. The work and materials must be contracted for in writing and with the consent of both spouses in the case of a family homestead.
Owelty
Owelty of partition is the money paid by one of two co-owners to the other when an equal partition of property cannot be made
Refinancing and Homestead
Homestead property remains subject to forced sale when a valid homestead lien is simply refinanced
Reverse Mortgages
A reverse mortgage is an extension of credit that is secured by a lien on a homestead
Provides that advances be made to a borrower based on the equity in a borrower’s homestead. The requirements for the lender making the extension of credit are numerous and detailed
Transfer of Homestead
In the case of married couples, neither spouse may sell, convey, or encumber a homestead w/o the joinder of the other spouse
Sales of homesteads at a fixed price that is less than the appraised FMV at the time of sale, and in conjunction w/ a buyer leasing the property to the seller for more than the fair rental value of the property are deemed loans rather than sales. Any deed that results from this type of transaction is void and no lien attaches to the homestead property as a result of the purported sale. Sales to certain family members are exempt
When a claimant dies leaving family members who are entitled to occupy the premises as a homestead, the homestead exemption continues to protect those survivors’ rights
