HOMESTEAD DECLARATION

If you own a home, you should consider filing a Declaration of Homestead with the County Recorder in your county. A homestead declaration protects your home from being seized and sold in the event that a money judgment is entered against you by a court.

Three types of property may be homesteaded:

A single person, or in the case of a married couple, either or both spouses can decide to declare a homestead. A homestead declaration will not prevent your home from being sold to pay a judgment for:

• Taxes;
• A mortgage, trust deed, or other loan arrangement used to purchase your property or a mortgage, trust deed, or loan to refinance the purchase of your property which you consented to;
• A mechanic's lien or other obligation to pay arising out of improvements made to your property; and
• Any lien to which you agree by accepting the property subject to codes, covenants and restrictions, deed restrictions or equitable servitude.
  
  As to any other judgment against you, a Declaration of Homestead protects the first $125,000 of equity you have in your home. If you have less than $125,000 equity in your home and the judgment against it is not within one of the exceptions listed above, your home may not be sold to satisfy a judgment.
  
  If your equity exceeds $125,000, the home may be sold, but you are entitled to keep the first $125,000.
  
  If an unmarried person is making the homestead declaration, it must state that she/he is a householder. If a married person or persons sign the homestead declaration, it must state that he, she or they are married.
  
  Regardless of the marital status of the person(s) signing the homestead declaration, it must state that it is his, her or their intention to use and claim the property as a homestead.
  
  When the homestead declaration is signed by a married person or persons, it must state that he, she or they are residing with their family, or with the person or person under their care and maintenance, on the homestead premises. If the premises are the separate property of one spouse, both spouses must join in signing the homestead declaration.
  
  The premises claimed should be described by a full address and a full legal description. The deed to your property will contain the legal description.
  
  Because no one can predict when death or sudden incapacity may strike, it is prudent to file a homestead declaration upon purchasing a home and taking title to it, or as soon as possible thereafter. However, a homestead will protect up to $125,000 of your equity in your home provided that it is recorded with the County Recorder at any time before proceedings are instituted to cause the forced sale of your home to satisfy a judgment. So, even after a judgment has been entered against you, it is possible to record a homestead declaration, which will be effective.

If you have more than $125,000 in equity in your home and creditors are trying to collect against the residence, a judge will normally appoint three appraisers who will determine the value of the property, your equity in it, and whether the property can be divided in such a way as to protect your home while paying your judgment creditor(s). If such a division proves to be impractical, the property will be sold and you will receive the first $125,000 from the sale which cannot be seized to pay the judgment(s).