Judgment Liens and the Texas Homestead

A judgment, when properly abstracted in the real property records, “constitutes a lien on and attaches to any real property of the defendant, other than real property exempt from seizure or forced sale under Chapter 41, the Texas Constitution, or any other law, that is located in the county in which the abstract is recorded and indexed, including real property acquired after such recording and indexing” (Texas Property Code Sec. 52.001). However, Property Code Sec. 52.0012, which became effective September 1, 2007, provides a procedure for releasing homestead property from a judgment lien. In the past, a homestead was not exempt from a perfected lien, but it was exempt from forced sale so long as the property remained the homestead of the debtor. Exocet Inc. v. Cordes, 815 S.W.2d 350, 352 (Tex.App.-Austin 1991, no writ). Section 52.0012 now provides a statutory method for securing a release of any judgment lien against homestead property.

Property Code Sec. 52.0012 provides for the filing of an Affidavit that must substantially comply with the form that appears in this section of the Code. Filing of the affidavit must be preceded by a 30 day notice letter, sent certified mail and addressed to the judgment creditor and its attorney of record. The letter must contain a copy of the affidavit that the homestead owner intends to file in the real property records. The requirements of the letter and the affidavit are highly technical and should be done by an attorney knowledgeable in this procedure.

The judgment creditor may contest the homeowner’s action by filing a contradicting affidavit if there is reason to believe that the homeowner’s affidavit is false.

The ultimate result, if this procedure is followed to the letter, is that the homeowner’s affidavit serves as a release of the judgment lien as to the homestead property. Also, subsequent bona fide purchasers and mortgagees are entitled to rely absolutely on the homeowner’s affidavit.

Title companies, being the risk-averse institutions that they are, have been reluctant to close transactions without demanding (as they always have) that judgment liens against the homestead be paid before they will insure the new buyer’s title. The unfortunate effect of this is to substantially degrade the usefulness of the new statute. Before expecting that the new statute will result in a smooth sale and closing, sellers should “shop” title companies to find one that is friendly to the procedure before opening title. Expect the legislature to amend this statute in the future.

Information in this article is proved for general educational purposes only and is not offered as legal advice upon which anyone may rely. Legal counsel relating to your individual needs and circumstances is advisable before taking any action that has legal consequences. Consult your tax advisor as well. This firm does not represent you unless and until it is retained and expressly retained in writing to do so.

David J. Willis is board certified in both residential and commercial real estate law by the Texas Board of Legal Specialization. More information is available at his website, http://www.LoneStarLandLaw.com. Copyright 8 2009 by David J. Willis. All rights reserved.