What is a homestead?
A homestead is a statutory exemption that protects homeowners against the rights of creditors. In simpler terms, it is a security device that hinders most creditors from attaching the equity or forcing the sale of a home if it is an individuals principle place of residence.
There are some limitations and exceptions, but in theory, the homestead provides a barrier of security against liens and or judgments filed against a person, if the lien is placed against his home, to collect a debt.
If the house, condominium, duplex, or mobile home is the primary place of residence, a Declaration of Homestead can be filed at any time.
Marital status does effect the homestead. If an individual owns the home prior to getting married and the spouse goes on title to the property, a new homestead should be filed showing both spouses as homesteaders. If there is a divorce and one of the spouses become sole owner of the home, that individual should file a homestead in his name only. This also applies if one of the spouses dies.
A homestead will remain in effect until the home is sold or an Abandonment of Homestead is recorded. If a home or mobile home is moved from one lot to another, it loses it's homestead status and a new Declaration of Homestead needs to be recorded.
Loans or liens
Loans secured by deeds, trusts, or other devices of security, are not covered by the homestead exemption. Tax liens issued by state, federal or local government entities also supercede the exemption.
If a lien is recorded against the home prior to the homestead being recorded, the lien remains against the property and the exemption may not protect the property from the creditor.
Also, when a homeowner voluntarily puts his property up as security for repairs or improvements and the bill is not paid, the homeowner remains responsible for the debt and the homestead offers no security.
Homesteads and homestead filings vary from state to state and may even vary from county to county within a state.
Declaration of Homestead forms may be obtained from local stationary stores, realtors, and attorneys. They have to be filled out correctly, signed, notarized and filed with the county recorder in the county that the property is located.
Note: This is intended for general information so contact an attorney for legal advice.
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