Opinion
No. 05-08-00720-CV
Opinion Filed March 5, 2009.
On Appeal from the Probate Court No. 1, Dallas County, Texas, Trial Court Cause No. 07-2029-P.
Before Justices WRIGHT, O'NEILL, and LANG.
Opinion By Justice LANG.
MEMORANDUM OPINION
Apex Financial Corporation appeals the probate court's judgment denying its claim against the estate of John Edward Wylie. In two issues, Apex argues the probate court erred when it denied the claim because (1) the lien at issue did not attach while the subject property was Wylie's homestead, or (2) Wylie waived his homestead right when he executed the lien. We conclude the probate court did not err when it denied Apex's claim because the lien was void ab initio. Further, we conclude Apex did not preserve its second issue for appellate review. Because all dispositive issues are clearly settled in law, we issue this memorandum opinion. See Tex. R. App. P. 47.2(a), 47.4. The probate court's judgment is affirmed.
I. FACTUAL AND PROCEDURAL BACKGROUND
Wylie, decedent, executed a sworn promissory note payable to his daughter, Jennifer Jeanne Wylie, on October 29, 1979. In the sworn, handwritten promissory note, Wylie promised to pay his daughter seventy thousand dollars "upon the sale, conveyance or transfer of his real property . . . commonly known as 3715 La Joya" as compensation for her accompanying Wylie and taking care of him during a two month trip to Scandinavia and Russia. The promissory note was purportedly secured by a sworn deed of trust executed on the same day and encumbering property located at 3715 La Joya Drive, Dallas, Texas, 75220.
Wylie died on June 7, 2007, and his daughter recorded the deed of trust. Frank LaBarba, Jr. was appointed administrator of Wylie's estate and qualified on June 30, 2007. Then, Jennifer Wylie transferred the deed to Apex. On October 8, 2007, Apex presented its authenticated claim to LaBarba requesting that the claim on the promissory note be allowed and approved as a preferred debt and lien claim to be paid in the due course of administration. LaBarba rejected the claim and Apex timely filed suit.
At trial, the parties stipulated the La Joya property was Wylie's homestead when he executed the promissory note and deed of trust. Apex's three exhibits, the promissory note, deed of trust, and transfer of lien, were admitted into evidence without objection. Apex provided a "chronology to prove our lien status as a preferred debt lien," then rested with the understanding the court would allow briefs on "some legal issues that have been submitted to the court." LaBarba stated he understood the legal issues would be argued at a later time, but that it was his contention "this was a homestead and as such the lien is void."
LaBarba filed his post-trial brief at the end of March. Apex responded to LaBarba's contentions in its post-trial brief and, for the first time, addressed the issue of whether Wylie waived his homestead right, asserting the promissory note and deed of trust provided "clear and convincing proof" he intended to waive that right. Apex had not pleaded waiver of homestead rights. The probate court heard oral argument regarding the parties' post-trial briefs on April 21, 2008. We have not been provided a reporter's record of the April 21 hearing. The probate court's order of May 1, 2008 denied Apex's claim "after considering the evidence, stipulations between the parties and arguments of counsel." In the same order, the probate court found the lien was "void at the time Decedent executed the deed of trust" because the La Joya property was Wylie's homestead. The order made no statement regarding whether Wylie waived his homestead right, and Apex did not request findings of fact and conclusions of law.
II. VALIDITY OF LIEN
Apex argues the probate court erred when it denied Apex's claim because the lien did not attach while the property was Wylie's homestead and the debt could "only be satisfied" after the property was sold, conveyed, or transferred to another party. Specifically, Apex asserts Wylie "intentionally and clearly set forth the terms" of the promissory note and deed of trust to ensure the lien could not be satisfied until the property was no longer Wylie's homestead. LaBarba responds no lien was ever created because the property the deed of trust purported to encumber was Wylie's homestead at the time both the promissory note and deed were executed and the lien was "not one of the constitutionally permitted liens that might be imposed on a homestead." LaBarba asserts the lien is void and Apex's "proceeds of sale" assertion fails because the proceeds of a homestead sale remain exempt from creditors for six months after the sale. See Tex. Prop. Code Ann. § 41.001(c) (Vernon Supp. 2008).
A. Standard of Review and Applicable Law
Whether a lien is valid in light of a property owner's homestead status is a question of law. See Florey v. Estate of McConnell, 212 S.W.3d 439, 445 (Tex.App. 2006, pet. denied). The homestead of a single adult or family is protected from forced sale for the payment of a debt unless the debt is among the permissible homestead exceptions, such as purchase money on the homestead, work and materials used to construct improvements on the homestead property, or unpaid taxes. Laster v. First Huntsville Props. Co., 826 S.W.2d 125, 129 (Tex. 1991); see also Tex. Const. art. XVI, § 50; Harleux v. Harleux, 154 S.W.3d 925, 927 (Tex.App.-Dallas 2005, no pet.). "Any attempt" to mortgage homestead property is void, except as approved by the Texas Constitution. Laster, 826 S.W.2d at 129. The lien "must be tested as to its validity as of the date of execution." Pappas v. Gounaris, 311 S.W.2d 644, 647 (Tex. 1958). However, "a homestead lien that may not have complied with constitutional requirements at the outset can be made valid at a later date if the power to do so exists under our constitution or statutes." Doody v. Ameriquest Mort. Co., 49 S.W.3d 342, 346 (Tex. 2001); see also Curry v. Bank of Am., N.A., 232 S.W.3d 345, 348 (Tex.App.-Dallas 2007, pet. denied). Where no "cure" provision exists, the homestead right is superior if the lien attached after the property acquired homestead status. See Inwood N. Homeowners' Ass'n v. Harris, 736 S.W.2d 632, 635 (Tex. 1987). Further, "`[a] mortgage or lien that is void because it was illegally levied against homestead property can never have any effect, even after the property is no longer impressed with the homestead character.'" Florey, 212 S.W.3d at 444 (quoting Laster, 826 S.W.3d at 130).
The Texas Constitution contains a provision allowing a lender to "cure" mistakes within a reasonable time to validate a lien securing a section 50(a)(6) extension of credit or home-equity loan. See Doody, 49 S.W.3d at 346 (discussing article XVI, section 50(a)( 6)(Q)(x) of the Texas Constitution). That provision does not apply in this case.
B. Application of the Law to the Facts
Apex's arguments that the lien was not recorded until after Wylie died, or that no action was taken to enforce collection while the property was Wylie's homestead, are immaterial. The deed of trust was executed to secure payment on a debt not included among the permissible homestead exceptions in the Texas Constitution. See Florey, 212 S.W.3d at 445; see also Tex. Const. art. XVI, § 50. The parties stipulated the La Joya property was Wylie's homestead when the promissory note and deed of trust were executed. Accordingly, the lien was void ab initio and cannot be given effect after Wylie's death. See Florey, 212 S.W.3d at 444.
Further, we agree with LaBarba that including language providing the lien could be enforced only upon the sale, conveyance, or transfer of the La Joya property did not make the lien valid as of the date it was executed. The property code specifically protects the proceeds of a sale of a homestead from creditors for six months after the date of sale to allow a homeowner to reinvest the proceeds in another homestead. See Tex. Prop. Code Ann. § 41.001(c); Taylor v. Mosty Bros. Nursery, Inc., 777 S.W.2d 568, 570 (Tex.App. 1989, no pet.).
Accordingly, we conclude the probate court did not err when it denied Apex's claim because the lien was void ab initio. We decide against Apex on its first issue.
III. WAIVER OF HOMESTEAD RIGHTS
In the alternative, Apex argues Wylie waived his homestead right when he executed the promissory note and deed of trust. Apex asserts these documents, admitted at trial, provide "clear and convincing proof" of Wylie's intent to waive his homestead right. LaBarba contends Apex is raising this issue for the first time on appeal because Apex did not plead waiver of homestead rights, nor did Apex put on evidence regarding Wylie's intent to waive his homestead right.
The record shows Apex did not plead waiver of homestead rights. Apex does not contend waiver of homestead rights was tried by consent and the record does not contain "evidence of trial of the issue" demonstrating the issue was tried by consent. See Reynolds v. Nagely, 262 S.W.3d 521, 528 (Tex.App.-Dallas 2008, pet. struck); Case Corp. v. Hi-Class Bus. Sys. of Am., Inc., 184 S.W.3d 760, 771 (Tex.App.-Dallas 2005, pet. denied). All evidence relevant to the issue of waiver of homestead rights was relevant to the validity of the lien. See Case Corp., 184 S.W.3d at 771. Accordingly, Apex has not preserved the issue for appellate review. See Tex. R. App. P. 33.1. We decide against Apex on its second issue.
IV. CONCLUSION
We conclude the probate court did not err when it denied Apex's claim because the lien was void ab initio. Further, we conclude Apex did not preserve its waiver of homestead rights issue for appellate review. The probate court's judgment is affirmed.