Legal Question in Real Estate Law in California

Yes, other things being equal, such as you haven't moved, a declared homestead recorded prior to the recording of an abstract of judgment will shelter equity up to the statutory amount. It does not prevent a foreclosure; it only rearranges the priorities of the claimants, placing your exemption ahead of the later-filed involuntary liens. In many cases, however, that makes it unattractive for the judgment creditor to pursue a foreclosure. Therefore, someone with a judgment for only $4,000 is maybe more likely to pursue collection by other means, such as garnishment of wages or the like.

Recording a homestead is almost always a waste of time, sinece the homestead exemption is automatic. The only reason for recording is if there is some question which of several properties you own and live in is your primary residence. So if you are wealthy enough to spend your time between your chalet in Tahoe, your golf course home in Palm Springs, and your pied a terre in San Francisco, and you want to protect one of them, then you need to make sure to record a homestead claim on the one you want to protect the equity in. If you're like the rest of us and live in one home, the exemption automatically applies to that property whether you record or not.

It must be noted that a homestead declaration does not have to be recorded to claim a homestead exemption. �Whether or not a homestead declaration has been recorded: (a) Nothing in this article affects the right of levy pursuant to a writ of execution. (b) Any levy pursuant to a writ of execution on a dwelling (as defined in Section 704.710) and the sale pursuant thereto shall be made in compliance with Article 4 (commencing with Section 704.710) and the judgment debtor and the judgment creditor shall have all the rights and benefits provided by that article.� (Code of Civ. Proc., � 704.970.)

With that said, 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.)