Homestead laws are designed to protect property owners, and Texas has some of the strictest in America. They are meant to prevent creditors from forcing the sale of the family home to pay off the owner’s debts, even when there are no other assets to satisfy the owed amount. But what happens when the issue isn’t forced sale to pay debts, but a valid contract to sell the property covered by homestead laws? Do the same protections apply?
Real Estate Contracts And Specific Performance
If two parties enter into a written agreement for the sale of a house and the seller refuses to uphold their end of the bargain, this is obviously a breach of contract. The real issue is how to remedy this breach. With most breach of contract lawsuits, the aggrieved party is looking to recover monetary damages as compensation, but there are some cases where money won’t fix the problem. The alternative is to seek specific performance, an equitable remedy asking the court to enforce a certain part of the contract (in this case, the sale of the property itself) when money won’t remedy the issue. Because each piece of real estate is unique, this is an option many buyers might pursue.
When Is Specific Performance Enforceable?
A Texas court tackled this issue in Allen v. Monk, where a husband and wife contracted to sell their house and then attempted to avoid the sale by claiming homestead protections. The court’s analysis looked at the state statute’s language on homestead conveyance, both before it is updated in 1968 and after. Allen v. Monk, 505 S.W.2d 523, 523 (Tex. 1974). 1968, the law stated that conveyance of a homestead could only be done jointly by the spouses, specifically that a husband could not convey the home without the wife’s consent. In this case, the wife could then retract her consent to sell before title passed, and that Texas’s homestead protections protected the sellers from a specific performance remedy. But in 1968, the law was changed to read:
“The homestead, whether the separate property of either spouse or community property, shall not be sold, conveyed or encumbered without the joinder of the spouses, except as provided herein or by other rules of law.” (Article 4618).
This eliminated the need for a joint conveyance when conveying a homestead property, and only required that both spouses join in the disposition. The court stated any joinder in the sale, conveyance, or encumbrance of the homestead property by a spouse fills the consent requirement for a proper transfer of real property, and that one spouse could not retract her consent to avoid it. Homestead protections would not apply to the executory contract, and thus the buyers could seek a specific performance remedy in a suit against the sellers.
Before 1968, the law was interpreted in a way that acknowledged the complicated and often lesser bargaining power of the wife in a marriage. This loophole allowed women to protect their interest in the homestead. The change in law reflects a change in society. Married women have full contracting power just like their husbands, and using this loophole to avoid property sales and specific performance is no longer fair or necessary. So, when it comes to real estate transactions (including the sale of homestead property), specific performance is an option that an aggrieved buyer can seek as a legal remedy.
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