Homestead Law

A homestead is exempt from sale under the state's Homstead Exemption. (West's Ann.Cal.C.C.P. § 704.720) The amount of the homestead exemption is the greater of the following: 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). Three hundred thousand dollars ($300,000). The amounts 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. (West's Ann.Cal.C.C.P. § 704.730) If a declared homestead is voluntarily sold, the proceeds of sale are exempt in the aboave amount for a period of six months after the date of sale. If the proceeds of a declared homestead are invested in a new dwelling within six months after the date of a voluntary sale or within six months after proceeds of an execution sale or of insurance or other indemnification for damage or destruction are received, the new dwelling may be selected as a declared homestead by recording a homestead declaration within the applicable six-month period. (West's Ann.Cal.C.C.P. § 704.960)

A judgment lien recorded after a declared homestead does not attach to the property, except to the extent the equity in the property exceeds the liens and encumbrances and exemption. Cal. Civ. Pro. § 704.950, whereas in the absence of a declared homestead, an abstract of judgment would immediately attach and reach any equity in the dwelling above the amount of any liens and encumbrances recorded before the abstract. In re Pike (9th Cir. BAP 1999) 243 B.R. 66, 70. The effect is to make it impossible for the debtor to pass clear title even if there is no equity above the exemption.