What Is a “Homestead” Protection?
Homestead laws protect people from getting their homes foreclosed or seized during times of personal economic hardship. These protections differ depending on your state of residence, but California is known for having relatively strong homestead laws.
The law allows homeowners to declare their residence a “homestead,” meaning that a portion of the home’s equity becomes untouchable by creditors, making it so you cannot be forced to sell your home even if you file for bankruptcy or face some other economic hardship.
How Much Equity Can I Protect Through Homestead Laws?
California Code of Civil Procedure section 703.140 lists equity protection limits. The maximum amounts of equity that a homeowner may declare homestead exempted are as follows:
- All California homeowners may exempt up to $75,000
- If the homeowner lives with at least 1 other person, they may exempt up to $100,000
- If the homeowner or spouse is over the age of 65 and/or disabled, they may exempt up to $175,000
- If the homeowner is 55 years old making less than $25,000 in annual income or married making less than $35,000, they may exempt up to $175,000
Are There Exceptions to California Homestead Laws?
If a homeowner owes certain types of debts, they may not be able to qualify for any homestead exemptions on their equity. These debts include:
- Unpaid alimony
- Unpaid child support
- Unpaid liens
It is also important to note that homestead laws solely protect the equity in your home, not any other assets you may have. Therefore, you should not assume the furniture and belongings in your home are protected if your home has a homestead exemption.
How Do I File for a Homestead Exemption?
Getting legal help with your homestead declaration is a very good idea, given that California does not require an attorney to file for homestead exemptions. The process is complicated and requires that you send in many documents related to your residence and finances. In addition, your attorney may help you qualify for a higher exemption than you previously thought was possible.