What is a Homestead Declaration?

What is a Homestead Declaration?

A homestead declaration is a written statement, made under penalty of perjury, that claims a particular “dwelling” (for example, a house, condominium, boat, or similar property) as the owner’s principal place of residence.

When a homestead declaration is (1) signed by a homeowner, (2) acknowledged (i.e., “notarized”) by a notary, and (3) “recorded,” it helps to protect the home against loss to creditors. “Recorded” means that the original signed and notarized homestead declaration is filed in the clerk’s or recorder’s office for the county in which the home is located.

A properly prepared and recorded homestead declaration immunizes the home (and the land on which it is situated) from many (but not all) legal enforcement measures. For example, if a homeowner files a petition in bankruptcy, it may be possible, because of a homestead declaration, to retain the home, or at least a portion of the equity in the property, instead of losing it to creditors.

Determining when to file a Homestead Declaration is fact-based and dependent upon your situation.  California has an automatic homestead exemption.  Based on that, you may or may not want to file a homestead declaration. If you have little or no equity in your home, little advantage is to be gained. Should you have minimal debt, there is also no reason to file a homestead declaration. Finally, if you’re planning to sell your home in the near future and have no delinquent debt problems, filing the declaration form offers no immediate advantages.  If you have little equity or minimal debt, you may still be concerned for the future.While you should file the homestead form before you have a serious financial problem, creditors cannot file liens until they obtain court judgments. You’ll have plenty of notice before you need to declare a homestead.

Speak with a professional about this topic before making this declaration with the County offices.