If someone sues you in court and you lose, the person who sued you may try to sell your home to get their money back. If they have a homestead, this is harder for them to do.
With a homestead, some of the value of your home is protected. You have equity in your home if it is worth more than what you owe on it. For example, if your home is worth $350,000 and you still owe $300,000 on it, you have $50,000 in equity. The $50,000 can be protected by a homestead.
Homesteads can be either automatic or declared.
What is a homestead that sets itself up?
You already have one if you live in the home you own. It keeps some of your home's value safe until you sell it. To have an automatic homestead, you don't have to sign or file anything.
What does "declared homestead" mean?
A legal form that you file with the Registrar-office Recorder's is a "declared homestead." If all three of the following are true, a declared homestead will protect some of your equity for six months after you sell your home:
Within six months, you sell your home and buy another one;
The amount saved is used to buy a new house;
You fill out a homestead form for the new house.
Homesteads can only be made out of the home you live in.
Who needs a homestead claim?
A declared homestead can help if you've been sued in court, lost, and have a big money judgement against you. It keeps some of the money you get from selling your home safe for six months. This gives you time to buy another home and file a new homestead declaration.
How much is protected by a homestead?
The same amounts are protected by both automatic and declared homesteads:
$50,000 for a single person;
$75,000 if the homeowner lives with at least one family member who doesn't want the house;
$150,000 if the homeowner is over 65 or has a physical or mental disability;
$150,000 if the homeowner is at least 55 years old, single, and makes less than $15,000 a year;
$150,000 for a married couple making less than $20,000 a year together;
A homestead won't keep you safe from:
If you don't pay your mortgage on time, the lender can take your home away.
Getting a mechanic's lien paid off;
A court order to pay child support or spousal support.
How do I file a homestead claim?
Follow these steps to file a declared homestead:
You can buy a form that says "declared homestead" at a stationery store or look online for a generic form.
Complete the form.
Sign and have the form notarized.
Contact the office of the Registrar-Recorder where the property is located to find out about fees and where to file.
Companies that offer to help you file a "declared homestead" cannot charge more than $25.
