South-Western Legal Studies in Business

Rural Homestead Conditions Defined by State Statute
Description Appeals court held that Texas state bankruptcy law clearly defined the conditions needed to claim a rural homestead exempt from bankruptcy proceedings. So long as the property meets the definitions of the statute, regardless of its economic use, it qualifies as rural.
Topic Bankruptcy
Key Words Homestead Exemption; Rural Homestead
C A S E   S U M M A R Y
Facts The Bouchies filed for bankruptcy and contended that their 85 acres of property is a rural homestead under Texas law and hence exempt from the bankruptcy estate. Creditors of the Bouchies challenged their claim. The bankruptcy court held that the property is within the extraterritorial jurisdiction of Converse, Texas, as it is served by police and fire protection, but that it is not provided other services as required by the language of the Texas bankruptcy code, so the property qualifies as a rural homestead. The creditors appealed.
Decision

Affirmed. The Texas bankruptcy statute clearly states that a homestead is an urban homestead if it is within the limits of a municipality or within its extraterritorial jurisdiction and is served by police and fire and at least three other services, including electricity, gas, sewer, storm sewer, and water. Since the Bouchies received only police and fire service, they are clearly a rural homestead under the statute. The fact that they did not use the property for their economic support or rural economic activity does not matter.

Citation In the Matter of: Bouchie, 324 F.3d 780 (5th Cir., 2003)

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