Legal Question in Real Estate Law in California

A recorded declaration of homestead does not prevent a judgment debtor from obtaining a levy of real property, simply because a homestead declaration has been recorded. Generally, when a judgment creditor seeks to enforce a money judgment on a natural person�s interest in a real property dwelling, whether a declared homestead or not, he or she must first obtain a court order for the sale of the dwelling. (Code of Civ. Proc., � 704.740 subd. (a).)

After the judgment creditor has caused a real property dwelling to be levied on (other than a dwelling which is personal property or real property in which the judgment debtor has a leasehold estate with less than two (2) years at the time of the levy) the levying officer must serve notice on the creditor that the levy has been made and that the property will be released unless he or she applies for an order for sale and files a copy with the levying officer within twenty (20) days. (Code of Civ. Proc., � 704.750 subd. (a).)

After the judgment creditor has filed the application for an order for sale, the court must set a time and place for hearing. (Code of Civ. Proc., � 704.770 subd. (a).) The judgment creditor must serve, personally or by mail, a copy of the court�s order to show cause on the judgment creditor, along with a copy of the application and a copy of the notice of hearing. The service must be done no later than 30 days before the time the court sets for hearing. (Code of Civ. Proc., � 704.770 subd. (b).)

At the hearing, the court determines whether the dwelling is exempt. If the court determines that the dwelling is exempt, the court must determine the amount of the homestead exemption and the fair market value of the dwelling. The court shall make an order for sale of the dwelling subject to the homestead exemption, unless the court determines that the sale of the dwelling would not be likely to produce a bid sufficient to satisfy any part of the amount due on the judgment. (Code of Civ. Proc., � 704.780 subd. (b).)

The homestead may not be sold if no bid is received at the court ordered sale that exceeds the amount of the homestead exemption plus any additional amount necessary to satisfy all liens and encumbrances on the property, including but not limited to any attachment or prejudgment lien. (Code of Civ. Proc., � 704.800 subd. (a).)

The term �all liens and encumbrances,� however, does not include the lien of the creditor requesting the sale. �Based on the foregoing, we hold that �all liens and encumbrances� in section 704.800 refers to those which are senior to the lien of the executing judgment creditor, and that the sale of the dwelling in this case is not prohibited by section 704.800.� (Rourke v. Troy (2nd Dist. 1993) 17 Cal.App.4th 880, 883-886.)

You should have gone to the hearing to challenge the creditor's claims and allegations. If this happened in 2004, then as Toby Keith says, it's a little too late. http://www.youtube.com/watch?v=nOd2NuHgwew