What is a California Homestead Exemption?

Homestead Exemption

What is a California Homestead Exemption?

I have had clients ask – “Should I apply for a Homestead Exemption?  What will it do for me?”

Well, there is lots of talk about it since Gov Newsome signed into law Assembly Bill 1885 which became effective on January 1, 2021.

Ok…but what is it?

By definition:  “A homestead exemption is a regulation that shields a homeowner’s principal residence from creditors in the case of bankruptcy, judgment creditor, or death of a spouse. The California Constitution provides that “[t]he Legislature shall protect, by law, from forced sale a certain portion of the homestead and other property of all heads of families.”

So what does it do?

“’The object of all homestead legislation is to provide a place for the family and its surviving members, where they may reside and enjoy the comforts of a home, freed from any anxiety that it may be taken from them against their will, either by reason of their own necessity or improvidence, or from the importunity of their creditors.” Thorsby v. Babcock (1950)

In other words, the homestead will protect you from any Judgement Creditors, but you will still be responsible for the mortgage, deeds of trust or taxes.

How does AB 1885 change the Homestead Exemption?

Based on California Code of Civil Procedure 704.730….

(a) The amount of the homestead exemption is the greater of the following:
    (1) The countywide median sale price for a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred thousand dollars ($600,000).
    (2) Three hundred thousand dollars ($300,000).
(b) The amounts specified in this section shall adjust annually for inflation, beginning on January 1, 2022, based on the change in the annual California Consumer Price Index for All Urban Consumers for the prior fiscal year, published by the Department of Industrial Relations.

In other words, AB 1885, which became effective January 1, 2021, protects debtors who own homes by increasing the California homestead amount to an amount that would keep most homeowners safe from creditors.

If you would like to proceed with filing your homestead exemption —

Click here for the DECLARATION OF HOMESTEAD (Individual)

Click here for the DECLARATION OF ABANDONMENT OF DECLARED HOMESTEAD 

Click here for the DECLARATION OF HOMESTEAD (Spouses as Declared Owners)

 

Thanks to Talkov Law Corp for information about the California Homestead Exemption & California Best Title for the forms.

Carol Gilles, Realtor at The RealEstate Group, has been licensed since 1980.  During this time,  Carol has stayed up to date with many real estate law changes.  Contact Carol at 310-864-9738 for further information.

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