Estate Planning 101
By Attorney Marlene S. Cooper
The Homestead Exemption
The homestead exemption can be obtained in two ways: (1) the automatic homestead exemption granted as a matter of law to every homeowner, and (2) an express declaration of homestead by the homeowner, which is notarized and recorded with the county recorder. The amount of equity protected is the same for each type of homestead exemption; however, they operate quite differently in terms of the protection afforded.
The declared homestead provides much greater protection for the property owner than the automatic homestead. With the automatic homestead, the homeowner is protected in the event of a forced foreclosure sale but not a voluntary sale. With the declared homestead, however, the exempt proceeds from a voluntary sale may be reinvested within six months, thus allowing the debtor to invest in another residence. With the automatic homestead, judgment liens attach to all interests in the property that are subject to the enforcement of money judgments. For the declared homestead, however, a judgment lien filed after the declaration of homestead can only attach to equity in an amount greater than the homestead exemption and any pre-existing liens on the property. Another important distinction is that the declared homestead survives the death of the homestead owner, whereas the automatic homestead does not.
A Declaration of Homestead form can be purchased at office supplies or legal stationery stores. For those who are internet savvy, the form can also be downloaded from the Registrar-Recorder’s website in the real estate section (www.lavote.net). There is certainly nothing to lose but much to gain by taking the simple step of filling out and recording the declaration.
© 2023 by Marlene S. Cooper. All rights reserved. (You may obtain further information at the website www.marlenecooperlaw.com, by email at MarleneCooperLaw@gmail.com, by phone at (626) 791-7530 or toll-free at (866) 702-7600. The information in this article is of a general nature and not intended as legal advice. Seek the advice of an attorney before acting or relying upon any information in this article).