I know that Texas law states that an owner may not pledge their homestead property if it is subject to an Ag exemption. What is an Ag exemption and how do you get it removed? Is an Ag exemption a tax records thing or a zoning thing? We have a borrower whose land was once agricultural but has now been turned into a neighborhood. The appraisal we got back shows the property as "agricultural". Help! Can we make this loan or not.

It should show as an ag exemption on the tax certificate. The owner can have it removed, but may have to pay back taxes as, if I recall, I think the change in status is retroactive to the first of the year. I'm not real sure about this. But the tax cert is the place to start. Then have the customer check it out. The ag exemption only applies to home equity loans secured by the borrower's homestead property.