Texas homestead law protects individuals and families from losing their primary home for debts, such as credit cards or car loans, that are not secured by the real estate. Mortgages and equity lines of credit are legal liens against the title and therefore exempt from homestead law provided the lender obtains a bond waiver.
Texas has a complicated law on homestead protection. The definition of a homestead varies, depending on whether the property is urban or rural and whether you are single or a family. A home that is in a rural area may be classified as urban if it meets certain criteria. This is one reason why lenders require a bond waiver before loaning money to a homeowner.
A Texas homestead can be up to 10 acres if designated as urban and 100 or 200 acres if designated as rural. A homestead is urban if it receives police protection and three municipal services, regardless of whether the land is within the city limits. The municipal services covered are electric, natural gas, storm sewer, sewer and water.
The homestead law applies to single people for 100 acres and to families for 200 acres of rural land. The value of your home is not relevant for homestead protection, as the law designates by property size and family structure. According to Texas law, a family exists when one person is dependent on the head of household. Widows and widowers keep family status after the death of the spouse. The dependent can be a minor or an adult, such as a sister or brother.
Real estate lenders require the person getting a mortgage to sign a bond waiver on the homestead. This means the homeowner forfeits her rights to claim protection under Texas homestead laws. A bond waiver gives lenders the right to sell the property and recoup the entire loss related to the loan. The lender does not have to post a bond with the court to protect you against a fraudulent foreclosure. Additionally, if you hire someone to make improvements on your property, such as adding a room to the house, the contractor has the right to require a bond waiver.
You must live on the property full time as your primary residence to be covered by the homestead law. Homestead law does not apply to second homes, rental homes or business property. Additionally, a person and not a company must own the property.
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