The homestead is sacred in Texas. It reaches back to before Texas was its own country. Most Texans are familiar with the term homestead because it provides a property tax exemption and protection from creditors.
Where do we get our homestead rights from in Texas?
The Texas Constitution provides all individual Texans with homestead rights. There is no dollar limitation on the exempt value of a homestead. A homestead right is protection from having homestead property forcefully sold to satisfy a debt. A person or family may only have one homestead property, and it must be used as a home or as both an urban home and a place to exercise a calling or business.
The right to be protected from a forced sale of a homestead is not absolute. For example, failing to pay a mortgage or property taxes can push the sale of a homestead. But failing to pay credit card debt cannot.
If a judgment creditor finds a non-homestead property, the creditor may force the sale of that non-homestead property. However, if a judgment creditor files an abstract in the county where an individual’s homestead is located, that homestead owner can have the lien released from the property because Texas law expressly prohibits judgment liens from attaching to homestead property.
Does homestead protect just real property?
No, it is not just realty that is protected. Texas law provides for personal property valued at $60,000 for a family or $30,000 for a single adult (exclusive of liens) is exempt from garnishment, attachment, execution, or other seizure.
The following personal property is protected by homestead laws in Texas: (1) home furnishings, including family heirlooms; (2) provisions for consumption; (3) farming or ranching vehicles and implements; (4) tools, equipment, books, and apparatus, including boats and motor vehicles used in a trade or profession; (5) wearing apparel; (6) jewelry not to exceed 25 percent of the aggregate limitations prescribed by section 42.001(a); (7) two firearms; (8) athletic and sporting equipment, including bicycles; (9) a two-wheeled, three-wheeled, or four-wheeled, motor vehicle for each member of a family or single adult who holds a driver’s license or who does not contain a driver’s license but who relies on another person to operate the vehicle for the benefit of the nonlicensed person; (10) the following animals and forage on hand for their consumption: (A) two horses, mules, or donkeys and a saddle, blanket, and bridle for each; (B) 12 head of cattle; (C) 60 head of other types of livestock; and (D) 120 fowl; and (11) household pets.
Are wages protected by Texas homestead law?
Under Property Code Section 42.001(b)(1), “current wages for personal services, except for the enforcement of court-ordered child support payments,” are exempt “from garnishment, attachment, execution, and other seizure.” This includes severance pay. Note that wages are expressly exempted from the $60,000 family limit and the $30,000 single adult limit. Additionally, “unpaid commissions for personal services not to exceed 25 percent” of these limits are also protected.
Retirement plan funds are protected
Retirement plans (IRAs and 401(k)s) are exempted under Section 42.0021 so long as contributions do not exceed the amount that is deductible under current law. Rollover proceeds are exempt for 60 days.
Also exempted under Section 42.0021 are specific savings plans “to the extent that the plan, contract, annuity, or account is exempt from federal income tax, or to the extent federal income on the person’s interest is deferred until actual payment of benefits to the person” under the Internal Revenue Code. This includes health savings accounts.
College tuition funds protected
College tuition funds (including IRS Section 529 funds and accounts established under Subchapter F, Chapter 54 of the Education Code) are exempted under Section 42.0022.
Exemption for Life Insurance and Annuities under the Insurance Code
The Insurance Code adds to the exempt list the cash value of annuities and life insurance policies, which are declared to be “exempt from garnishment, attachment, execution, or other seizure.” Tex. Ins. Code §1108.051. This “applies to any benefits, including the cash value and proceeds of an insurance policy, to be provided to an insured or beneficiary under . . . an insurance policy or annuity contract issued by a life, health, or accident insurance company.” There is no dollar limit. There is, however, an exception in Section 1108.053 for premiums paid “in fraud of a creditor.”
What size can the homestead property be?
The homestead cannot be of unlimited size. Property Code Section 41.002 supplies the following limitations on urban and rural homesteads:
(a) If used for 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 continuous 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 may be in one or more parcels, with the improvements thereon.
The statutory definition applies to realty and fixtures, not movable personal property. Movable, non-affixed items are not considered part of the homestead. They are not exempt from execution unless included in the list of own exempt property under Property Code Section 42.002.
Homestead Rights in Texas
Texas homestead law is complicated. It is highly recommended that you contact a real estate attorney for questions about Texas homestead rights. Contact the Waco real estate attorneys at Dunnam & Dunnam to discuss the particular matters involving Texas homestead rights at 254-754-6437.
Vance Dunnam Jr. is a board certified residential real estate and commercial real estate law specialist.