When a borrower owns a vacation home, ranch, farm or residential rental property, the borrower may collateralize a loan with this property. Since this property could be viewed as a homestead, the Bank must satisfy itself that the property is not homestead. In order to develop evidence which would be helpful to the Bank in the event the borrower later claims that such property is his/her homestead, the borrower should be required to designate his/her homestead and attest that the subject property is not his/her homestead in a sworn statement to the Bank. See the sample Designation of Homestead and Affidavit of Non-homestead form located at the end of this Chapter.
Both husband and wife must complete an affidavit, even if the homestead property or the non-homestead property is the separate property of one of the spouses and/or if only one spouse is a borrower, since a non-owner spouse has the right under Texas law to live in the homestead until their death or abandonment of the homestead. In this instance a Community Property Disclaimer may also be appropriate. A form is located at the end of this chapter.
A Deed of Trust will document the lien on the property. The Non-Owner Occupancy Rider should be used with the Deed of Trust. See the form located at the end of this Chapter.