Legal Question in Real Estate Law in California

Re: homesteading

The Code of Civil Procedure contains two sets of provisions that exempt certain items of a debtor's property from seizure and sale to satisfy certain debts.

One of these sets of provisions lists things like tools of the trade, health aids, heirlooms, etc. and also certain equity interests in a personal residence. These items are "automatically" exempt and since an interest in a residence is included, this is called the "automatic hmestead" provision.

In addition, there is a further homestead that an owner or part owner can obtain by completing a written declaration, which is then signed, notarized and recorded. This is called a "declared homestead."

Many writers advise against filing a declaration of homestead on the theory that (a) it doesn't provide much additional protection above and beyond that already provided by the automatic homestead provisions of law, and (b) filing one is a "red flag" to creditors that the filer is in financial difficulty. I do not take a position.

The protection afforded by either homestead is limited to a certain dollar amount of equity, and does not prevent foreclosure to attack excess equity. Further, homestead offers no protection against prior liens on the property, such as pre-existing mortgages or tax, mechanics' or judgment liens.