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What Exactly Is a Declaration of Homestead?
By Barbara Pronin
Anyone who owns and uses a home as their principal residence has a homestead. They may enjoy certain property tax benefits from this status and, in some states, homesteading can protect the owner from seizure or from losing equity due to lawsuits that result in certain judgment liens.

While state requirements vary, most eligible homeowners must file a declaration of homestead – a short form identifying the owner and naming the property as his/her principal residence – with a court or a public agency. This can generally be done by mail or in person. A recording fee may be required.

Once the document has been recorded, many states allow a portion of the assessed value of the homesteaded property to be exempt from taxation, reducing the overall value of the residence when calculating property tax. There may also be local exemptions and/or exemptions for the elderly, veterans and the disabled.

Other rules and benefits also vary by state. In California, an automatic homestead exemption applies to debtor/owners who have lived in the home continuously after a lien is filed, protecting against seizure for the lien up to a specific exemption amount whether or not a declaration form has been filed. In Vermont, homesteaded properties are granted an adjustment in property taxes if the household income is less than a specified amount.

The state may also protect homesteads, or a portion of their value, from seizure by creditors, although not covered by the homestead are tax liens and mechanic’s liens, judgments for spousal or child support, mortgage loans, or judgments recorded before the declaration of homestead was filed.

If the owner sells the homesteaded property, or at any time changes his/her principal place of residence, the homesteading status ceases to exist. Until that time, however, a title insurance policy ensures the homesteading’s priority on the property as it relates to documents of record.
 
Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.

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