Legal Question in Real Estate Law in California

The value of a "homestead" depends on the type and relative recording date of the lien. A homestead offers no protection against claims based upon voluntary liens such as morgages and notes secured by a deed of trust on the property. A homestead likewise does not afford protection against liens filed before the homestead, but this is unlikely to be a factor in your case. Finally, the amount of equity exempted by a homestead is set forth in Code of Civil Procedure section 704.730 - $75,000 for many, or $100,000 or $150,000 for others.

If you are afraid of being sued, the homestead may be important. If you are afraid of a lender's foreclosure, it's no help.

Also, there is both a declared homestead and an "automatic" homestead. The offer partially overlapping protection.

It must be noted that a homestead declaration does not have to be recorded to claim a homestead exemption. �Whether or not a homestead declaration has been recorded: (a) Nothing in this article affects the right of levy pursuant to a writ of execution. (b) Any levy pursuant to a writ of execution on a dwelling (as defined in Section 704.710) and the sale pursuant thereto shall be made in compliance with Article 4 (commencing with Section 704.710) and the judgment debtor and the judgment creditor shall have all the rights and benefits provided by that article.� (Code of Civ. Proc., � 704.970.)

With that said, a recorded homestead does extend several protections to the declared homestead. A declared homestead limits the extent to which a subsequently recorded judgment lien, other than a judgment lien based on a judgment for child or spousal support, will attach to the declared homestead. When there is a declared homestead, a judgment lien will attach only to the surplus value of the property over the amount of the homestead exemption set forth in Code of Civil Procedure section 704.730 plus the amount of all liens and encumbrances on the declared homestead at the time the abstract of judgment is recorded to create the judgment lien. (Code of Civ. Proc., � 704.950.)

Recordation of a declared homestead also provides an advantage for a judgment debtor at any future hearing in which a judgment creditor seeks to challenge the existence or amount of a homestead exemption in that the judgment creditor has the burden of proof at the hearing. (Code of Civ. Proc., � 704.780 subd. (a)(1).) If no declaration was recorded, the burden would be on the judgment debtor to prove that the property sought to be levied was the homestead.

Finally, and importantly, if a homestead declaration is recorded prior to the operative date of any amendment to Code of Civil Procedure section 704.730 that increases the amount of the homestead exemption, the amount of a declared homestead exemption is increased by the same amount. If a judgment creditor has obtained a lien on a declared homestead prior to the operative date of any amendment increasing the exemption amount, the amount of the declared homestead exemption remains the amount in effect at the time the lien attached. (Code of Civ. Proc., � 704.965.)

Since you recorded prior to the most recent amendment, you are entitled to the increase. The amount of protection is as follows:

A judgment debtor may claim a homestead exemption in the amount of $75,000. (Code of Civ. Proc., � 704.730 subd. (a)(1).) If the judgment debtor or his or her spouse who resides in the homestead is, at the time of the attempted sale of the homestead, a member of a family unit, he or she is entitled to an exemption in the amount of $100,000.00. There must be at least one member of the family unit who owns no interest in the homestead or whose only interest in the homestead is a community property interest with the judgment debtor. (Code of Civ. Proc., � 704.730 subd. (a)(2).)

The amount of exemption is increased to $175,000 if the judgment debtor or his or her spouse who resides in the homestead is, at the time of the attempted sale of the homestead: 1) 65 years of age or older; 2) physically or mentally disabled and, as a result of that disability, unable to engage in substantial gainful employment; or 3) 55 years of age or older with a gross annual income of not more than $15,000, or if married, a gross annual income, including the gross annual income of his or her spouse, of not more than $20,000 and the sale is an involuntary sale. (Code of Civ. Proc., � 704.730 subd. (a)(3).)