If you are sued in court and lose, the person who sued you may try to force the sale of your home to collect their money. A homestead makes it harder for them to do this.
A homestead protects some of the equity in your home. If your home is worth more money than you owe on it, you have equity. For example, if your home is worth $350,000 and you owe $300,000, you have $50,000 in equity. A homestead can protect the $50,000.
There are two types of homesteads, automatic and declared.
What is an automatic homestead?
If you live in the home you own, you already have one. It protects some of your home equity until you sell your home. You do not have to sign or file anything to have an automatic homestead
What is a declared homestead?
A declared homestead is a legal form that you record with the Registrar-Recorder’s office. A declared homestead protects some of your equity for six months after you sell your home if the following three conditions are all true:
Only the home you live in qualifies for a homestead.
Who needs a declared homestead?
If you’ve been sued in court, lost, and have a large money judgment against you, a declared homestead can help. If you sell your home, it protects some of the proceeds for six months. This gives you time to buy another home and record another declared homestead.
How much does a homestead protect?
Both automatic and declared homesteads protect the same amounts:
A homestead does not protect you against:
How do I file a declared homestead?
You can file a declared homestead by taking these steps:
Companies offering to help you file a declared homestead cannot charge more than $25, this includes notary and recording fees.
Contact us for more information or speak with one of our counselors at (800) 973-3370. If you live outside of Southern California, call us at (213) 974-1450.
Updated July 12, 2011
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