Protect Your Home
For most of us, a home is the biggest investment we will ever make and the largest asset we will ever own. To help protect your home in case you are ever sued, most states have established a very easy procedure allowing any homeowner to file what is called a Declaration of Homestead. If you own a home, you should consider filing a Homestead Declaration with the County Recorder in your county.
What is a Homestead Declaration?
A Declaration of Homestead is a document that is recorded to protect a portion of a property owner’s equity in their residence against the claims of certain creditors. Filing a Homestead Declaration will not invalidate bona fide liens or mortgages on your property.
What Kinds of Property May Be Declared as a Homestead?
There are basically four types of property that can usually be protected by a Homestead Declaration:
- Land with a dwelling house and its appurtenances (fixtures and buildings);
- A mobile home;
- A condominium unit; and
- Land, dwelling house and appurtenances held under an alodial title.
In other words, a title that is free and clear of any encumbrances for which taxes have been prepaid to the state.
Who Can Declare a Homestead?
A Homestead Declaration can be made by a single person or married persons. In the case of married persons, either one of the spouses, or both spouses together, may declare a homestead.
How will a Homestead Declaration Protect My Home?
If a judgment is obtained against you, a Homestead Declaration will protect the equity you have in your home up to your state’s dollar limitation. If you have less than the limitation of equity in your home, your home will not be sold to satisfy a judgment. If your equity exceeds the limitation, the property (or a portion of your property) may be sold, but you are entitled to keep the amount up to the limitation.
Are There Types of Judgments That Are Not Protected By a Homestead Declaration?
Yes. A Homestead Declaration will typically not prevent your home from being sold to pay a judgment for the following:
- A mortgage, trust deed or other loan arrangement used to purchase or refinance your property or improvements to your property;
- A mechanic’s lien or other obligation to pay because of improvements made to your property; and
- Any lien to which you agree by accepting the property subject to codes, covenants and restrictions, deed restrictions or equitable servitudes.
If I Have More Than the Homestead Limitation in Equity in My Home, What Will Happen If There Is a Judgment Against Me?
Usually, a judge will appoint three appraisers to determine the value of the property. These appraisers may also determine whether the property can be divided in such a way as to protect your home while still paying your judgment creditors. If a division is not practical, the property will likely be sold and you will receive proceeds from the sale up to the limitation amount.
How Do I File A Homestead Declaration?
A Declaration of Homestead is a simple form. You can generally purchase a form for filing a Homestead Declaration from an office supply store. After you fill in the necessary information, you must sign the Homestead Declaration in the presence of a Notary Public, who will notarize your signature. The notarized Declaration of Homestead must be filed with the County Recorder in the county in which the property is located. You can file a Declaration of Homestead on your own. If you are unsure or have specific legal problems arising out of a judgment or potential judgment against you, you should consult an attorney.
When Should I File a Homestead Declaration?
It would be wise to file a Homestead Declaration upon the purchase of your home and taking title to it, or as soon as possible after. A Homestead Declaration will protect your equity up to the limitation amount as long as it is filed with the County Recorder at any time before proceedings are instituted to sell your home to satisfy a judgment.