The Finance Commission of Texas and the Texas Credit Union Commission (“Commissions”) have jointly issued their final interpretations of Section 50(a)(5), Article XVI, of the Texas Constitution relating to the creation of a valid home improvement lien on a Texas homestead. These interpretations were published in the July 1, 2005 issue of the Texas Register (Vol. 30, No. 26) and will become effective July 7, 2005. They are codified in the Texas Administrative Code in 7 TAC §§152.1, 152.3, 152.5 152.7, and 152.15. This memorandum is comprised of four sections. The first section is the text of Section 50(a)(5), Article XVI, of the Texas Constitution. The second section is a redaction of the preamble to the interpretations published in the Texas Register and consists of the Commissions’ reasoning for and summary of the interpretations. The third section is the text of the interpretations as published in the Texas Register. The fourth section contains our comments on the interpretations. I. Section 50(a)(5): (a) The homestead of a family, or of a single adult person, shall be, and is hereby protected from forced sale, for the payment of all debts except for: (5) work and material used in constructing new improvements thereon, if contracted for in writing, or work and material used to repair or renovate existing improvements thereon if: (A) the work and material are contracted for in writing, with the consent of both spouses, in the case of a family homestead, given in the same manner as is required in making a sale and conveyance of the homestead;

Complete Memorandum