Legal Question in Consumer Law in California

Re: Homestead

You can purchase a Homestead Declaration from virtually any stationary store. You then need to fill the form out, sign it in front of a notary, and then record it with the County Recorder's Office.

The Homestead Declaration does not prevent a creditor holding a judgment from applying to the court to sell a house. Rather, it protects a specified amount of the equity you have in the house from creditors holding judgments. The "exemption amount" depends on a variety of factors and ranges from $50,000.00 to $150,000.00. In the event a creditor attempts to sell the house in satisfaction of its judgment, there must be sufficient value to pay all prior liens (i.e, the first deed of trust) existing on the house, then pay the owner (or claimant) the "exemption amount," and pay all costs and fees associated with the sale (i.e., commissions, court fees, levy fees, etc.) before the house may be sold.

If the creditor can pay all of the liens, the homestead exemption amount and all costs of sale, and still have enough value (even if it is $1.00), it can sell the house and use the excess proceeds (above all the amounts listed above) to pay-down it's judgment.