Some people have recorded a document entitled homestead indicating that they want a certain dollar amount of the value of their principal residence to be protected from their creditors. Some companies even solicit people to have the company prepare and record the homestead on the homeowner’s behalf. But California law grants owners of a home a homestead, whether or not a document has been recorded. Stated differently, a certain dollar amount of a person’s personal residence is protected from creditors whether or not a written homestead document has been recorded on the home. This benefit that California law gives to homeowners is sometimes called a statutory homestead.
Recorded homesteads and statutory homesteads do not interfere with the sale of the residence.Recorded homesteads and statutory homesteads do not interfere with the placing of a mortgage (note secured by deed of trust) on the residence. Recorded homesteads and statutory homesteads do not interfere with a later transfer of the residence to a revocable living trust.
Assuming that a creditor obtains a judgment against a homeowner and that the homeowner’s equity in his or her home exceeds the dollar amount that is protected by the homestead, the creditor can force the home to be sold and the creditor can get that excess amount in satisfaction of the judgment.