California offers an automatic homestead exemption to every homeowner who occupies their home, whether it is a single-family dwelling, mobile home, or even a boat. As of January 1, 2021, the California homestead exemption is a minimum of 300,000 dollars, but can be as high as 600,000 dollars. Your homestead exemption amount is determined by the median housing price of your county during hte last calendar year. Because California real estate is so expensive, many counties (Los Angeles, Orange, San Francisco, San Diego, etc.) are already maxed out at the 600,000 protection amount.
It's important to understand California's exemption for your homestead is automatic, but Californians may also gain extra protection for the equity in their home by filing a homestead declaration. Filing a declaration of homestead does not increase the amount of equity that is protected in your home, but in the event of a judgment lien, it does protect any proceeds from the voluntary sale of your home, up to six months after the sale.
A homestead declaration protects your home's equity from both to forced and voluntary sales of the property. Exempt proceeds from a voluntary sale are protected if another home is purchased within 6 months.
In other words, if a homestead declaration is recorded before a judgment, this allows you the ability to sell your home and take your equity (up to the maximum amount protected by law) without having to pay the judgment creditor. Without a declared homestead, the equity must be used first to pay off any judgment liens before the title can be clear and the sale can be closed. This homestead declaration also allows you to move after the homestead is declared, and keep the declared property as your homestead.
Filing a homestead declaration typically requires three steps.
- Complete a homestead declaration form.
- Sign your declaration in front of a notary.
- Record the homestead declaration form with your county recorder's office. County Recorders' offices will typically charge a per sheet recording fee. Additionally, in 2017 California instituted an additional fee for recording most documents regarding real property.
Please note, a declaration of homestead does not protect you against foreclosure or a forced sale or auction by your mortgage lender. It does protect your home's equity from consumer creditors - up to the maximum amount afforded by California law - when is recorded before a judgment is recorded.
A homestead declaration will also not protect you against a court judgment against you for unpaid child support, delinquent alimony or most mechanic's liens. It is simply a means of extra protection from creditors for the equity in your home.
The Sacramento County Law Libary has a very good step-by-step guide to declaring a homestead. It may be viwed here: https://saclaw.org/wp-content/uploads/sbs-homestead-declaration.pdf
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