Homestead exemption won’t protect owner from nonjudicial foreclosure

Question: What is a homestead exemption, how much is it for and what does it do? My sister owns a detached single-family home in a common interest development and has a homestead exemption. She told me to do the same on my condominium. Can I put the exemption on my condo? If the association tries to nonjudicially foreclose on me, will the homestead exemption protect me?

Answer: Simply, a “homestead” is your home. Although the equity in your home may be available to your creditors, many states, including California, provide for a “homestead exemption” as a way of protecting some, or all, of your equity.

Property subject to a homestead exemption is not limited to condominiums like yours in a common interest development. Single-family homes, mobile homes and boats also are among the dwellings that can qualify.

For debtors with multiple homes, only the principal dwelling qualifies. That is defined as the home in which the owner lives on the date a judgment creditor’s lien attaches to the dwelling and in which the judgment debtor resided continuously until the date of the court determination that the dwelling is a homestead.

California homeowners receive an automatic homestead exemption to protect equity when a court forces the sale of a house to pay for a judgment. The automatic exemption can be claimed only by a debtor who resides, or is related to one who resides, in that homestead property at the time of the forced judicial sale of the dwelling.

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