Homestead exemptions protect the equity in a home up to a statutory amount determined by the state
For centuries, the family home has been considered sacred in the eyes of the law. Even today, the law affords the family home with certain legal protections against creditors.
In many jurisdictions and depending on the circumstances, part or even all of the equity in the homestead can be exempt or immune from creditor claims, even in bankruptcy.
In bankruptcy, the homestead exemption may not forbid the home from being sold. However, in some jurisdictions, such as California, while a creditor can still force the sale of your home, the law protects the homeowner’s equity in the property up to a certain amount.
Under many jurisdictions, if a creditor forces the home’s sale, the homesteader enjoys a priority position relative to the creditor. Upon the sale of the property, the homesteader will be paid first, depending on how much equity the homesteader has in the home and subject to the exemption limits of the state. Any money over the exempted limits belongs to the creditor.
In 2023, the California homestead exemption is at least $300,000 or more assuming the homeowner meets specific conditions.
