Homestead Exemption in California

The California homestead exemption protects a homeowner's equity against most judgment creditors. By recording a Declaration of Homestead, you establish rights that prevent many debts — from accidents, illness, or misfortune — from forcing the sale of your home. The policy behind the law is to provide a place where the family can live free from the anxiety that their home may be taken from them.

How it works: if the market value of your home is $120,000, you have a first mortgage of $65,000 and a second mortgage of $25,000, your equity is $30,000. The homestead exemption protects this equity from judgment creditors. Covered property types include houses, condominiums, duplexes, mobile homes, community apartment projects, and planned developments.

Important limitations: the homestead does not protect against judgment liens recorded before the Declaration of Homestead was recorded, loans or debts voluntarily secured by the property (mortgages, deeds of trust), mechanic's liens for labor or materials on the property, or tax liens from federal, state, or local governments. Every homeowner who resides in their home is eligible, but only one valid homestead can exist at a time.

The homestead can be removed by filing an Abandonment of Homestead, by recording a homestead on another property (which automatically removes the first), or by selling the home (which automatically terminates it). The law is technical and complex — a Declaration that is not properly prepared may be invalid. Team Goeglein at Fidelity National Title recommends consulting an attorney for specific advice and identifies homestead declarations during the title search on every South Bay transaction.