A Texas homeowner signs a home equity loan agreement that includes a provision requiring the borrower to pay a penalty if the loan is repaid early. Under the Texas Constitution, is this prepayment penalty provision enforceable?
Correct Answer
D) No, because the Texas Constitution prohibits prepayment penalties on home equity loans secured by the homestead
Under Texas Constitution Article XVI §50(a)(6)(G), a home equity loan on the homestead must not include a provision for a prepayment penalty or any other fee for prepayment. The borrower has the constitutional right to repay the loan in whole or in part at any time without penalty. This is one of the many consumer protections Texas provides for home equity lending on the homestead.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Tx Community Property Homestead Question
Background Knowledge for Tx Community Property Homestead
Real World Application in Tx Community Property Homestead
Common Mistakes to Avoid on Tx Community Property Homestead Questions
Related Topics & Key Terms
Key Terms:
More Tx Community Property Homestead Questions
Under the Texas Family Code, which of the following is NOT classified as a spouse's separate property?
A couple marries in Texas after each owning their own homes for several years. Under the Texas Family Code, what happens to the homes they each owned before the marriage?
Rachel receives a diamond ring as a birthday gift from her mother during her marriage to Paul. Under the Texas Family Code, how is the diamond ring classified?
Under the Texas Family Code, which of the following actions does NOT require the joinder of both spouses when dealing with community property?
Under the Texas Constitution, what is the maximum size of a rural homestead for a family in Texas?
- → A Texas homeowner defaults on a personal loan of $50,000. The creditor obtains a judgment and seeks to force the sale of the homeowner's primary residence to satisfy the debt. Under Texas homestead law, can the creditor force the sale?
- → A creditor attempts to place a lien against a Texas family's homestead for an unpaid medical bill of $25,000. Under Texas homestead law, can this lien attach to the homestead?
- → A Texas homeowner converts their homestead into a rental property and moves to another state. After two years, a creditor seeks to foreclose on the former homestead for an unpaid business debt. Under Texas law, can the creditor force the sale?
- → Mark and Lisa are married and live in Texas. During their marriage, Mark purchases an investment property using earnings from his salary. Under the Texas Family Code, how is this property classified?
- → Before her marriage to David, Sarah owned a rental house in Austin. After the wedding, rental income from the property accumulates in a joint bank account. Under the Texas Family Code, how is the rental income classified?
- → Under the Texas Family Code, what is the legal presumption regarding property acquired during a marriage in Texas?
- → After 10 years of marriage, William inherits a lakehouse from his father. William's wife, Karen, assumes the inheritance is community property because they received it during their marriage. Under the Texas Family Code, who is correct?
- → Under the Texas Family Code, what is the legal term for a written agreement between spouses that converts community property into one spouse's separate property?
- → Under the Texas Family Code, what happens to community property when one spouse dies without a will in Texas?
- → A Texas couple gets married. The wife owns a car free and clear that she purchased three years before the wedding. Under the Texas Family Code, what is the classification of this car?
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Valuation and Market Analysis
10% of exam
Previous Question
A married couple in Texas decides to permanently relocate from their homestead in Dallas to a new home in Houston. They rent out the Dallas property but do not officially declare a new homestead. Under Texas law, when does the homestead protection on the Dallas property end?
Next Question
A creditor attempts to place a lien against a Texas family's homestead for an unpaid medical bill of $25,000. Under Texas homestead law, can this lien attach to the homestead?