The Republic of Texas enacted the first Texas homestead law in 1839. When Texas joined the union in 1846, this important body of law was included in the constitution of the newest state. Article 12, Section 50 of the Texas Constitution grants unique protections to the family homestead.

It is designed primarily to protect a spouse and children by requiring the signature of both spouses to sell or encumber the homestead. There is a long-held but undocumented belief that part of the reason for homestead protection in Texas was to prevent a husband from going into town on Saturday night, getting drunk, and losing the home in a poker game.

The family home is protected from forced sale by creditors, except for:

1. the purchase money mortgage,

2. the taxes due thereon,

3. owelty liens,

4. mechanic and materialman’s liens,

5. pre-existing liens,

6. home equity loans, and

7. reverse mortgages.

Any other lien is void and unenforceable against the homestead. This protection is automatic and does not require any paperwork to be filed. There is no limit to the value of the homestead, but there are limits to the size. In a rural area, the limit is 200 acres for a married couple and 100 acres for a single person. In an urban area, the limit is 10 acres whether married or single. A person may designate an urban or rural homestead, but not both. It is also important for investors to note that a spouse’s signature is required to sell or borrow against the homestead, even if it is separate property. There is an old saying in Texas regarding the homestead: “It takes one to buy, but two to sell.”

When a spouse owning the home as separate property dies, the surviving spouse receives an automatic life estate. That is to say that the surviving spouse must be allowed to stay in the home as long as the surviving spouse lives, even if the home is left to another, and even if the surviving spouse remarries. 

Even in death, there is protection. The proceeds from the sale of the family home in an estate may only be used to pay the seven liens just listed. Any remaining funds pass to heirs or devisees.

Running a business out of the homestead does not affect this protection. For example, an owner of an office building is able to protect the building from foreclosure by general creditors if the owner were to reside in the penthouse and claim the entire building as a homestead. Proceeds from the sale of the homestead are protected for six months after the sale to allow an owner to reinvest the money into another homestead. The family home may also be rented out as long as the owner has a bona fide intent to return.

Finally, because this protection is a constitutional right in Texas, it cannot be waived and may only be amended with the approval of Texas voters. Investors looking for property in Texas should familiarize themselves with this important and unique aspect of property ownership in Texas.

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