Legal Question in Real Estate Law in California

A "homestead" in the sense you mean has nothing to do with the old concept of claiming land from the U.S. Government after successfully cultivating it, as the term meant in the 18th and 19th Centuries. In modern California law, "homestead" refers to a set of protective rights a homeowner has, or can acquire, in the home he owns.

We have two homestead laws, affording somewhat overlapping protection to a homeowner against seizure of his or her principal residence by creditors. One is a so-called "automatic" homestead which kicks in to prevent various creditors from taking all the equity in your home and also protects certain other property from seizure by creditors. In addition, there is a so-called "declared homestead" which requires the homeowner to take the pro-active step of preparing and recording a simple form.

The protection afforded does little or nothing to protect a homeowner from voluntary liens, such as mortgages and deeds of trust, or in the case of the declared homestead, little to no protection against previously-recorded liens of whatever nature.

Generally, I see little advantage in recording a declaration of homestead unless you expect to

have people filing liens against you in the future, for example, if you are involved in some financially or legally risky businesses. People who record homesteads are waving a red flag to others they do business with, saying "I'm expecting to get sued!" (At least sometimes, to some extent).

Both the automatic and the declared homestead are set forth in the Code of Civil Procedure.

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.)