What are the Texas Homestead Laws?
Originally, the Texas Constitution, Article 16, Section 50 prohibited the imposition of a lien against homestead property in the State of Texas except for: (a) purchase money (b) improvement money or (c) payment of taxes. This was the status quo for more than 100 years, and meant that other home equity loans were unenforceable. In November of 1997, the voters of the State of Texas approved an amendment altering this situation. Under the current law, homeowners may borrow up to 80% of the market value of the home. That is, the sum of all debt against the property can not exceed 80%. For example, a couple who owned a home valued at $150,000 that still had $100,000 in debt against it would qualify for a home equity loan of up to $20,000, because the total debt could not be more than $120,000. There are additional restrictions under the new law including, but not limited to: • Lenders may not seize any asset except the borrower’s home to satisfy a default unless they can prove the loan was
