Opinion ID: 1158402
Heading Depth: 1
Heading Rank: 15

Heading: declared homestead information and benefits

Text: In today's society, it is possible to become involved in a lawsuit at one time or another. Hopefully, you will not. Many times a lawsuit is caused by circumstances beyond our control. When you owe someone money, they are considered your creditor. If a creditor sues you in court and wins, they can record a lien against your home. This is often called judgment lien. (1) JUDGMENT LIENS: When a Declaration of Homestead has been properly prepared and recorded, it prevents most judgment liens from attaching to your home if the declaration was recorded prior to a creditor recording his judgment. Simply stated, the recording of a Declaration of Homestead can keep certain judgment liens off your home. NOTE: This benefit becomes very important when you want to sell your home. Title companies usually will not establish a clear title unless and until all liens are paid. By recording a Declaration of Homestead, you can sell your home and put the exempt proceeds ($30,000 to $75,000) in a new home within six months without having to use that money to pay for existing judgments that were protected by virtue of the declared homestead. This ONE TIME recording will last as long as you own (or are buying) and live in the home. (2) WHAT ARE THE AMOUNTS OF PROTECTION? EQUITY PROTECTED FROM LIEN ATTACHMENT IN AMOUNTS UP TO: HUSBAND AND WIFE ........................................ $45,000 HUSBAND AND WIFE (when one or both is 65 or older or [] disabled) ............................................... 75,000 HEAD OR MEMBER OR [] FAMILY UNIT ...................... 45,000 HEAD OR MEMBER OF FAMILY UNIT (when declarant is 65 or old or disabled) ................................................ 75,000 SINGLE PERSON (65 or older or disabled) .................. 75,000 SINGLE PERSON ............................................ 30,000 NOTE: $30,000.00 available to each person owning an interest in the home, e.g., unnamed co-owner living in the home. DO THE PROTECTION LIMITS EVER INCREASE? - Yes. The California State legislature periodically raises the declared homestead protection amounts as shown above. You automatically receive any increases that are made without having to record any additional documents. (3) SELLING THE HOME: AFTER you voluntarily sell your home, if you invest the exempt proceeds in another home with six months, the previously exempted amount of equity WILL REMAIN PROTECTED WHILE MOVING TO A NEW RESIDENCE. By recording a Declaration of Homestead on the new home within six months, your protection continues from the date of the original homestead recording. In other words, YOUR PROTECTION IS CONTINUOUS AND UNINTERRUPTED EVEN THOUGH YOU SELL YOUR HOME. (4) PROTECTION CONTINUES AFTER DEATH: Any surviving spouse, or other member of the deceased declared homestead owner's family, will be protected under the declared homestead providing (a) they are living in the dwelling at the time the declared homestead owner dies, and (b) they inherit all or part of the deceased owner's interest in the dwelling. This is true even if the surviving person was not listed in the Declaration of Homestead. WILL MY HOMESTEAD DECLARATION PREVENT ME FROM REFINANCING MY PROPERTY? - No. Homestead Exemption does not apply to mortgages or deeds of trust placed on the property. You'll be free to refinance the property or obtain second and third deeds of trust. CAN I REMOVE HOMESTEAD IF I WANT TO? - Yes. You may remove a homestead at any time by recording a form called Abandonment of Homestead. Also, if you change your principal place of residence and record a new Homestead, the first Homestead recorded would cease to exist by operation of law. When you sell your home, the homestead on it is automatically removed. ARE THERE DISADVANTAGES TO RECORDING A DECLARATION OF HOMESTEAD? - No. Homestead is a valuable right given to you by law. By recording a Declaration of Homestead, you are exercising your right to protect your home to the maximum extent allowed by law. WHAT SITUATIONS ARE NOT COVERED BY HOMESTEAD EXEMPTIONS? 1. Judgment liens recorded before you recorded your Declaration of Homestead will attach to your home (this is why it is wise to record your Declaration of Homestead as soon as possible). 2. Loans or debts secured by the property (mortgages, deeds of trust, etc.) are not covered by the Homestead Exemption. When you voluntarily use your home as security for a debt, Homestead Exemption usually will not protect you. 3. When a contractor puts labor or materials into repairs or improvements on your property and you do not pay him, Homestead Exemption will not protect against his mechanics' lien. 4. Homestead Exemption will not protect against a judgment for spousal, child support, or tax liens. SOME ADDITIONAL BENEFITS OF RECORDING A DECLARATION OF HOMESTEAD 1. Your Homestead Declaration will prevent any judgment liens from attaching to the house - up to an amount equaling the total of most liens and encumbrances on the house and your Homestead Exemption: i.e., if your house is worth $100,000 with first and second mortgages totaling $80,000 and your Homestead Exemption as a married person is $45,000, judgment liens will not attach up to $125,000 (e.g., $80,000 plus $45,000). 2. If your have not homesteaded your home, and judgment liens have been filed against it, title insurance companies may not establish a clear title until all liens have been paid off. This may make it difficult, if not impossible, to sell your nonhomestead home. 3. If a creditor tries to force a sale of your home, with a Declaration of Homestead you'll have an important advantage over him in court. The creditor has the burden of proof to show why you should not be allowed the Homestead Exemption. Otherwise, the court will take your Declaration at its face value and grant you the exemption. 4. A recent court decision has established that property protected under a declared homestead may not be subjected to prejudgment attachment. A prejudgment attachment, if placed on your home, would make it virtually impossible to sell or refinance your home pending the outcome of the litigation. WHAT IS THE PROCEDURE FOR RECORDING A DECLARATION OF HOMESTEAD? - Just completed the enclosed retainer/information form and drop it in the mail. We will prepare the original documents for your signature and forward them to you with recording instructions. The cost for our service is $18.00. NOTE: Please remit only $18.00 with your retainer information form to Morse & Associates. There will be a $5.00 recording fee (payable to the county recorder in your area), and a small fee (usually $2.00) to have your Homestead Declaration notorized. MORSE & ASSOCIATES IS NOT AFFILIATED WITH ANY LENDING INSTITUTIONS.