Legal Question in Real Estate Law in California

No. The homestead declaration does not restrict or limit any right to encumber the declared homestead. �A homestead declaration does not restrict or limit any right to convey or encumber the declared homestead.� (Code Civ. Proc., � 704.940.)

The homestead statutes are designed to protect the value of the homestead from judgment liens, but they do not impair the right of a declared homestead owner to encumber the homestead with consensual liens, such as a deed of trust securing a promissory note executed by the declarant of the homestead.

If a declared homestead owner defaults on a debt secured by a consensual lien, the homestead is not protected from a nonjudicial foreclosure, that is, the homestead laws cannot be used to prevent a private sale pursuant to a power of sale conferred by the trust deed or mortgage securing the debt, as distinguished from preventing an execution of judgment sale. (Code Civ. Proc., � 703.010, subd. (b).)

What Mr. Roach's correct, but very long "legalese" answer means is that the homestead exemption does not apply to foreclosures of mortgages. It only applies to judgment liens after you lose a lawsuit.

The homestead laws wouldn't even stop a judgment creditor from levying upon homesteaded property and forcing its sale. The would only require a portion of the proceeds of sale to be set aside for the now-former owner.