TEXAS PROPERTY INFORMATION

Texas is unique in its application of homestead protection. In Texas state law, the term “homestead” refers to the special protection from the owner’s creditors, the right of occupancy given to a surviving spouse and children and favorable tax treatment accorded to the owner.

A Texas homestead is exempt from seizure and a forced sale for the claims of a creditor except for an encumbrance for purchase money loans,property taxes, written home improvement loans, partition liens, refinancing, home equity loans and, reverse mortgages. A Texas homestead is not secure from seizure for a debt owed to the federal government. And, any encumbrance existing on land prior to its dedication as a homestead is also enforceable.

The urban residential homestead consists of a lot or contiguous lots of 10 acres or less that is located within a city or town. There is no limit on the value.

Designation of a homestead is achieved by actual use and no recorded claim to the right is required. Either separate or community property may constitute a homestead. A homestead owner’s spouse must join in any transfer or encumbrance of a homestead, and neither spouse can abandon a homestead without the consent of the other.

A surviving spouse is entitled to the sole occupancy of a homestead for life, though the owner may have devised ownership rights in the property to someone else.

Unlike other states, Texas does not have a personal state income tax. As a result, real property (“ad valorem”) taxes can be higher than those assessed in many other states. There are exemptions from a portion of the ad valorem taxes if the property is a “homestead.” The exemptions (including additional exemptions for persons over 65 years of age, disabled persons, and qualified veterans) must be claimed by filing a form with the local property tax appraisal authorities (in Travis County, the Travis County Appraisal District, known as “TCAD”) no later than April 1st of the year for which you are first claiming an exemption.

Prorations At Closing

On your closing statement you will often see prorations of annual charges. Taxes for a current year, interest, maintenance fees, regular condominium assessments, dues and rents will be prorated through the Closing Date (the day you sign the final documents buying or selling property). Taxes for a given calendar year are assessed as of January 1st of that year but are not payable until as late as January 31st of the following year. Therefore it is customary for the buyer to receive a pro-rated credit for the portion of taxes that would accrue during the part of the year that the Seller owned the home. The buyer then pays all of the taxes for that year when they come due by January 31st of the following year.

Homeowners Associations And Deed Restrictions

Homeowners associations in various subdivisions or neighborhoods have authority to enforce deed restrictions. These organizations are also frequently authorized to levy mandatory assessments or fees on all owners of property within that particular subdivision and to enforce that obligation by filing (and foreclosing) liens on property if the assessments are not paid (even if the property is a homestead).