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Information about Homestead Exemptions... |
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What is a Homestead?
The Homestead Law is technical in nature
and complex in its application. A Declaration of
Homestead, which is not properly prepared, may be
invalid. The following is for general informational
purposes only and should not be considered legal advice.
We therefore suggest that you contact an attorney for
any legal advice on your specific situation.
What is the purpose of the homestead
exemption?
The homestead exemption gives you rights
against many debts you might incur through accident,
illness or misfortune. However, there are limitations
and exceptions. The policy underlying homestead laws is
to provide a place for the family where they may live
free from the anxiety that it may be taken from them.
How does the homestead exemption work?
Example: If the market value of your
home is $120,000 and you have a first mortgage or deed
of trust of $65,000 and a second mortgage of $25,000,
you have an equity of $30,000 in your home. The
homestead exemption protects this equity against
creditors.
What is a judgment lien?
When you owe someone money he is
considered your creditor. If a creditor sues and wins a
judgment against you, he can file a lien against your
home. The homestead exemption is protection against such
liens.
What kind of property is covered?
A house, a condominium, a duplex, a
mobile home, a community apartment project, or a planned
development.
Who is eligible for this homestead
exemption?
Every homeowner who resides in his or
her home is entitled to this protection. A person can
only have one valid homestead at a time.
Who may file a Declaration of Homestead?
Every homeowner may file. A homestead
will remain in effect until the house is sold, or the
homestead is abandoned by recording an Abandonment of
Homestead.
Are their limits to the amount of equity
protected?
Yes, for married couples, or single
parents with dependents living at home the homestead
exemption is $75, 000; unmarried individuals, $50,000.
For persons 65 years or older, or for persons physically
or mentally disabled, the exemption limit is $100,000.
What situations are not covered by the
homestead exemption?
Judgment liens recorded before you have
recorded your Declaration of Homestead will attach to
the house. Loans or debts secured by the property
(mortgages, deeds of trust, etc.) are not covered by the
homestead exemption. When you voluntarily put up your
home as security against a debt, a homestead will not
protect it. When a contractor or laborer puts labor or
materials into repairs or improvement on your property,
and you do not pay him, the homestead exemption will not
protect against the mechanic's lien. Tax liens by
federal, state and local governments.
Can I remove the homestead exemption if
I want to?
Yes. You can remove the homestead
exemption at any time by filing a form called
Abandonment of Homestead. Also, if you were to record a
homestead on another property, it would remove the
homestead on the first property. When you sell your
home, the homestead on it is automatically removed.
Information Courtesy
Fidelity National Title Company |
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