THE
CALIFORNIA HOMESTEAD EXEMPTION
There are actually two California Homestead Exemptions. One is automatic and one requires filing a document with the county recorder where the home is located.
The automatic homestead exemption allows you to keep a certain amount of the equity in your home, before unsecured creditors (those without a mortgage or judgment lien) are paid. If your home is involuntarily sold to satisfy a judgment, damaged or destroyed, or acquired for public use, Code of Civil Procedure Section 704.730 allows exemptions summarized as
follows:
| $50,000 |
$75,000 |
$125,000 |
|
Single Persons
|
"Family Unit"
Married Couple, Single Parent, Caregiver
for a dependent relative, etc. |
(1) Persons 65 & Older
(2) Disabled Persons
(3) Persons 55 & Older IF:
(a) annual income < $15,000 ($20,000 if married), and
(b) the sale of the home is not voluntary |
A Judgment Creditor cannot force the sale of your home unless the home can be sold for an amount that would satisfy all superior liens PLUS the Homestead Exemption amount.
RECORDING YOUR HOMESTEAD DECLARATION
Recording your homestead exemption is a simple process that merely requires the recording of a notarized "Homestead Declaration" which is a document detailing the property and stating that you reside at the home.
Recording the homestead declaration will give you priority over subsequent judgment creditors.
For example, if you own a home worth $250,000 and owe $200,000 on it, and one of your creditors obtained a $50,000 judgment against you on January 1st, 2008, then if you voluntarily sell your home or a non-judicial foreclosure proceeding is commenced, you would keep the $50,000 surplus above the mortgage ONLY IF you recorded your homestead exemption before January 1st, 2008.
Essentially, anyone who faces the possibility that a creditor might attach a lien on their home would benefit from filing a Homestead Declaration.
