Legal Question in Real Estate Law in California

My wife and I own a home worth 180000. The remaining balance is 79000. We have a declared homestead on the residence. We have one minor child living at home with us who has no interest in the homestead, but is dependent on us.

Am I correct that we have 100K equity protected via the homestead declaration?

Also, if we take out an equity line of credit for 40,000.00 does that affect the declared homestead protected amount?

I heard that if we did so, there would be a lien on our residence of 40,000 (assuming that is the line of credit) which would be added to the loan balance of 79000.00 BEFORE our 100K exemption. Bringing the amount protected to 200K.

could you comment please?

Thanks


Asked on 2/16/11, 1:32 pm

2 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

I wonder if you realize that your homestead offers no protection whatsoever against creditor claims based upon voluntary liens like mortgages, deeds of trust, home equity lines of credit, and the like. The value of declaring a homestead is that it gives you protection against claims of creditors holding involuntary liens recorded after (not before) your homestead is recorded. I do believe, however, that $100,000 is the correct amount of equity protection you have, but your theory that taking out an additional loan would increase your protection is incorrect.

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Answered on 2/16/11, 5:22 pm
Anthony Roach Law Office of Anthony A. Roach

Mr. Whipple is correct. A recorded declaration of homestead does not protect you from consensual voluntary liens such as mortgages and deeds of trust. It only give you protection against involuntary liens like judgments in lawsuits.

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Answered on 2/17/11, 7:39 am


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