Monday, October 22, 2012 - Article by: Marco Bajak - unknown -
Homestead Declaration Given the current housing and foreclosure crisis, it is not surprising that many people are interested in Homestead Declarations. Unfortunately, there are many unscrupulous websites and companies that are attempting to illegally capitalize from confusion over California's Homestead laws. You should know that it is illegal for a homestead filing service to charge more than $25 (including recording fees and notary fees) to prepare and file a homestead declaration on your behalf. Furthermore, a homestead filing service is prohibited from collecting a fee until the homestead declaration is recorded. If you have any questions about the regulation of homestead filing services, please read Department of Consumer Affairs Legal Guide H-1. You can download it from the California Department of Consumer Affairs website.
You should also be aware that a recorded Homestead Declaration does not protect against the forced sale of property by a bank, savings and loan or another lender holding a mortgage deed of trust on the property. Thus, a Homestead Declaration does not usually protect against a foreclosure action initiated by a lender. Also, a Homestead Declaration will not protect against a judgment for child support, spousal support or the enforcement of a valid mechanic's lien.
In California, a Homestead gives protection against involuntary claims against an owner's home. If someone wins a money judgment against you in court, the person or entity that won the judgment against you may try to collect the monetary damages by garnishing your wages, bank accounts, or having your home or other property sold to pay off the judgment. A Homestead Declaration does not prevent a creditor from garnishing wages.
The Homestead law protects a specific amount of equity in a home, depending on the age, family structure, income and physical or mental disability of the homeowner. A Homestead can be either automatic or declared. The State of California provides for an automatic Homestead, but it may still be wise to record a Declaration of Homestead with the County Recorder's office.
Every homeowner has an automatic Homestead exemption of at least $50,000 for their residence. In California, this protection is automatic and does not require the signing or filing of any kind of documents. The amount of the exemption increases to $75,000 if at least one member of the family unit living in the house owns no interest in the house,for example, when a homeowner lives with their minor children. The exemption rises to $150,000 when a homeowner is 65 years or older, or is physically or mentally disabled. The $150,000 exemption also applies to persons 55 years of age and older if that person is: single and has a gross annual income of $15,000 or less, or married and have a combined annual income of $20,000 or less, and the property sale is involuntary.
To declare a Homestead, a single-page document is usually filed with the County Recorder in the county where the property is located. A Declared Homestead does not change or increase the exemption amounts, but offers extra protection in that it is not automatically lost when a homeowner sells. It also protects proceeds of a sale exempted by the homestead from creditors for six months after the house is sold, even if the home was sold voluntarily. It is preferable to file a Declaration of Homestead before a claim is filed against the property. However, before such a claim can be filed against the property, a lawsuit judgment is normally required. Thus, there is usually plenty of notice, and a Homestead Declaration can be filed even at the last minute.
If you want a Homestead Declaration on your property, you can do it yourself. Fill-out the form using information which should be available from the deed you received when you purchased the property. You will need to sign the forms and have them notarized.
NOTE: The form is designed to be executed by a declared homestead owner or spouse. Additional language is required by law if it is executed by a guardian or conservator of the person or the estate of a declared homestead owner or a person acting under a power of attorney or otherwise authorized to act for a declared homestead owner or spouse. If you live in the State of California and need this form, I might be able to provide you one for free at your request (if available)
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