Nonjudicial foreclosure (trustee's sale) by an association is subject to an owner's recorded homestead. Homestead exemptions protect an owner's equity.
1. The California Homestead Exemption only applies to liens from previously unsecured claims for money that were reduced to judgment and then secured by an Abstract of Judgment. (Code Civ. Proc §703.010 et seq.)
2. Whether liens are 'voluntary' or 'involuntary' is not determinative of the owner's entitlement to claim the exemption.
3. The Homestead Exemption applies to the judgment debtor's principal residence.
4. The amount of the exemption is either $75,000 (single person), $100,000 (family unit) or $175,000 (over 65, low income or disabled). (Code Civ. Proc. §704.730(a).)
5. There are two ways to claim the exemption:
- Declared, which involves recording a declaration of homestead. (Code Civ. Proc. §704.950(c), §704.960(a).)
- Statutory, which is also known as an 'automatic' homestead exemption even if no declaration is recorded. (Code Civ. Proc. §704.720(b).)
6. There is at least one advantage to a declared homestead over the statutory exemption--the statutory exemption only applies to forced sales but the declared homestead will protect the amount of the exemption even if the judgment debtor voluntarily sells their house after an abstract has recorded.
7. The debtor's residence can still be sold in an execution sale if the amount of equity is greater than the applicable exemption.
Recording A Homestead. A homestead of record is a document that includes the names of the property owners, the description of the property, and a statement that the property is the principal dwelling of the owner and that the owner or spouse resides in the property. The declaration must be signed before a notary public and recorded with the county recorder. Code Civ. Proc. §§704.920-704.930. Without a recorded homestead declaration, homeowners do not get the benefit of the exemption in nonjudicial foreclosures.
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