Legal Question in Real Estate Law in California

file it jointly if your goal is to protect both of you.

Mr. Nelson is mistaken. First off a homestead declaration doesn't protect you, it protects nothing but a portion of the equity in a piece of real property. Second, if you are not on title to the property, you don't have any equity in it. And third, you can't declare a homestead in property you don't own. There may be any number of reasons that this would be a good time to add you to title, in which case you could then be on the homestead declaration as well. Why are you bothering with a homestead declaration anyway? Are you being sued? Are you facing bankruptcy? Do you anticipated losing a lawsuit or being in bankruptcy in the future? If not, a homestead declaration is irrelevant. All the homestead exemption does, whether by proof in fact or by declaration, is protect a certain amount of equity (it varies by age, disability if any, marital status, and record title). It doesn't protect you from being foreclosed on by a lender who holds a voluntary lien, such as a mortgage. And in most cases you get the homestead exemption whether you file a declaration or not.

At the risk of sounding too technical, I'd say Mr. McCormick may be mistaken in his criticism #2 of Mr. Nelson..... a married person who isn't on title to the other partner's real estate may indeed have some equity in that property. When community funds are used to pay the principal portion of the loan balance on separate property, the community begins to derive an interest in the property, which is called a "pro tanto" interest.

As I see it, a pro tanto interest of this sort is sufficient to qualify the spouse who isn't on title to be named as an owner in a homestead declaration. Code of Civil Procedure section 704.930(a)(1) says "A husband and wife both may be named as declared homestead owners in the same homestead declaration if each owns an interest in the dwelling selected as the declared homestead." This would also address Mr. McCormick's third objection to Mr. Nelson's answer.

Mr. McCormick is certainly correct, however, in pointing out that a declared homestead is probably not as useful a creditor-protection tool as many declarants believe. First, you already have a so-called "automatic homestead" that provides some of the same (limited) creditor protection as does the declared homestead. Second, filing a declared homestead, which can be read by anyone once on file, may be like waving a red flag in front of present and prospective creditors -- it's often like yelling "I'm in financial hot water!" in public. If you are hoping to do any future borrowing, maybe think twice about filing a homestead.

Thirdly, and perhaps most important, neither the automatic homestead nor the declared homestead give you that much protection. In particular, most pre-existing debts such as your home mortgage are not covered by their limited-scope protections.