Attorney Trey Wilson - RL Wilson Law

11 November 2009

Shedding the Homestead Designation and Family Transfers

Texas Homesteads -- Bars to Keep Strangers Out, or to Keep Owners In?

Many times, family members desire to sell properties to one-another. The reasons for these transfers are innumerable -- advance pre-death gifts, planning for the aging process, and maintaining the integrity of family properties are just a few. A common scenario is when a mother desires to sell her home to her son, but to remain living in the home until her death. This transaction -- simplistic as it seems -- could encounter difficulties and even be rejected by a title company because of the tremendous power of Texas homestead laws.

The homestead laws are contained in the Texas Constitution and in Chapter 41 of the Texas Property Code. Our courts have liberally construed the homestead protections, indulging every opportunity to exempt real property from forced sale by general creditors.

In Texas, exercising homestead rights in property does not require any formalized legal process, or the filing of a specific document. The general criteria for creating a homestead are (i) overt acts of usage, and (ii) an intent to claim the land as a permanent residence.

Every Texan family and every single adult person is entitled to a homestead exempt from seizure for claims of creditors Homestead exemptions in Texas were enacted to protect Texans' homes from creditors. However, once a homestead is designated, removing that designation will often require physical abandonment of the property. This can present problems under the scenario described above, since mom (the seller) will be required to abandon the homestead exemption before she can sell the property to her son (the buyer). This very likely could mean that mom won't be permitted to reside in the home for some period of time after the transfer.

Courts have been fairly consistent on this issue: Where a homestead claimant moves from property that has been previously impressed with homestead character, the question of whether such property continues as a homestead is dependent primarily upon the intention of the claimant. West v. Austin Nat’l Bank, 427 S.W.2d 906, 911-12 (Tex. Civ. App.–San Antonio 1968, writ ref’d n.r.e.) (citing McMillan v. Warner, 38 Tex. 410, 411 (1873)). “One does not necessarily abandon a homestead merely by changing residence.” Chesson, 149 S.W.3d at 808 (citing Rancho Oil Co. v. Powell, 142 Tex. 63, [69,] 175 S.W.2d 960, 963 (1943)). “To be an abandonment that would subject such property to seizure and sale, there must be a voluntary leaving or quitting of the residence with a then present intent to occupy it no more as a home . . . .” King v. Harter, 70 Tex. 579, 581, 8 S.W. 308, 309 (1888). “[O]ur courts have held that ‘it must be undeniably clear and beyond almost the shadow, at least [of] all reasonable ground of dispute, that there has been a total abandonment with an intention not to return and claim the exemption.’” Burkhardt v. Lieberman, 138 Tex. 409, 416, 159 S.W.2d 847, 852 (1942) (quoting Gouhenant v. Cockrell, 20 Tex. 96, 98 (1857))."

As with most legal problems, there are solutions to problems presented by the homestead exemption. Family transfers can be accomplished without changing mom's place of residence. One should seek experienced legal counsel when presnted with problems selling real estate that arise from the homestead exemption.

Trey Wilson --Named By Scene in SA Magazine As One of San Antonio's Best Real Estate Litigation Attorneys -- September 2008 -- As voted on by peers