Legal Question in Real Estate Law in California

The California homestead exemption protects the equity in your home up to a certain amount if a credit forces a sale of your home. Because you are over 65 years old, the amount of equity protected would be $175,000. Cal. Code. Civ. Proc. � 704.730(a)(3)(A). In the hypothetical situation where a creditor was able to force a sale of your home, the bank would be entitled to payment of the outstanding mortgage amount, you would be entitled to whatever remains up to $175,000 and the creditor would get the remainder.

A declaration of homestead extends the protections of the homestead exemption to a situation where you voluntarily decide to sell your home. If you do not file a declaration of homestead and then decide to sell your house at some time in the future, any creditor with a money judgment against you would have a claim to the sales proceeds superior to yours.

In order to file a Declaration of Homestead you need to be prepared to execute a written statement claiming that your home is your principle place of residence. This website will provide you with more information: http://www.dca.ca.gov/publications/legal_guides/h-1.shtml

First, "homestead" and "declaration of homestead" have nothing to do with the former practice of acquiring title to land by farming it for X years, except a common origin of the term. Nowadays, "homestead" refers to some special rights a homeowner has against creditors.

In California, our codes recognize two kinds of homestead rights, each providing some protection against loss of one's principal residence after a creditor attack resulting in a judgment. The first of these is the so-called automatic homestead, which is a few sections in the Code of Civil Procedure, and amounts to a list of items the creditor can't sieze and sell, such as a cheap car, tools of your trade, and part of the equity in your house. In addition, the legislature has provided for a so-called declared homestead, which is not automatic, and exists to protect you only if you prepare and record a simple form called a Declaration of Homestead.

The creditor protection provided by the two is overlapping, but not completely so, and consequently, it is worth while for someone in your position to do a declaration of homestead. However, neither kind of homestead provides complete protection, especially against voluntary liens such as your mortgage or home equity line of credit (if you have one). The declared homestead is mainly useful as a protection against judgments that might attach to your property after the homestead is recorded.

California Declaration of Homestead forms should be easy to find at legal stationers, maybe from a title company, or on line.