We all know individuals who have lost a piece of real property (real estate) or a personal item, such as an automobile, due to failure to make payments. Anytime you finance something the creditor has a lien on the item that was financed. That lien is what gives the creditor the right to take that item from you.

It’s also possible that, if you have debt that has not been satisfied, the creditor may take other personal property from you to settle the debt. Texas law does indicate that there are certain belongings that a creditor may not take from you to satisfy a debt. Those items that may not be taken are certain items that are considered to be part of your homestead.

There is also a business homestead that protects business people from losing tools of the trade.

The main thrust of this brief article is to talk about debt that affects your home. CAUTION! I am not an attorney. If you have a detailed question about debt on your home, call an attorney with real estate expertise.

Our residences – our homestead – are protected from being taken from us, with three exceptions. If a residence has back taxes, either the city, school system or the county may take your home at a tax foreclosure sale. If a person does lose his homestead at a tax foreclosure he does have a two-year redemption period where he can reacquire his home.

Redeeming the home requires that the prior homeowner pay the current owner what he paid for it, plus a 25% redemption premium in the first year and a 50% redemption premium in the second year, plus any back taxes that were paid, along with the cost of recording the foreclosure deed.

If an individual is behind on the payment of his mortgage, the lender can take back his home. That is usually about a 45 day process, starting from the date that the foreclosure started. Foreclosures do not have a lawful redemption period, but an individual could endeavor to work out something with the lender, if he has the financial wherewithal. Finally, Uncle Sam may take your home if you are in arrears on the payment of income taxes.

If an individual is behind on any of the aforementioned delinquencies and he is attempting to sell his home – his principal residence – he will have to pay any back taxes, mortgage fees and income taxes, in order to convey clear title to the property.

If he has other delinquencies, such as an unpaid medical bill, that kind of debt may not legally cloud the title to the property.

If an individual owns other dwellings, such as residential rental property, that kind of property may be taken to satisfy virtually any kind of debt.

For example, if I sue an individual in civil court, for unpaid debt, and I win my case, I may take the rental dwelling to settle the debt.

Now, if the dwelling already has some other kind of debt, it will be superior to my debt and I will have to pay it to clear up the title to the dwelling.

If you own your own home and you are being affected by unpaid debt, be sure to consult with an attorney who is skilled in real estate matters.

Mike McEwen is a real estate broker with 31 years in the business.



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