Does California Have a Homestead Exemption?

If you own a home and you're behind on bills, the fear is always the same: could I lose the house? In California, the homestead exemption is one of the strongest protections you have. Here is how it works in plain terms.

What the homestead exemption is

An exemption is a law that puts certain property out of reach of creditors. The homestead exemption protects a set amount of the equity in the home you live in. Equity is what your home is worth minus what you owe on it, such as your mortgage.

It covers more than houses. A condo, a mobile home and some other dwellings can qualify, as long as it is where you or your family actually live (Code of Civil Procedure § 704.710).

One common mix-up: the homestead exemption is not the "homeowners' exemption" on your property tax bill. That one lowers your property taxes a little. The homestead exemption protects your home from creditors.

The 2021 change, and why the amount moves every year

For years, California's homestead amount was fairly low and depended on your age, disability and family status. That changed on January 1, 2021. The new law set the exemption based on the median price of a single-family home in your county, with a minimum and a maximum amount (Code of Civil Procedure § 704.730). For many homeowners in Los Angeles County, the protection went up a great deal.

The minimum and maximum amounts now adjust each year for inflation. So any dollar figure you read online, including on older blog posts, may already be out of date. We check the current figure for your county when we review your case.

The homestead exemption in bankruptcy

In a bankruptcy case, California residents use California's exemptions, not the federal ones. California gives you two separate sets to choose from, and you must pick one:

The first set (Code of Civil Procedure § 703.010 and following) includes the large homestead exemption. Homeowners with equity usually use this one.
The second set (Code of Civil Procedure § 703.140(b)) has a much smaller homestead amount but a bigger "wildcard" that can protect any property. Renters and people with little home equity often do better here.

In Chapter 7, a trustee can sell property that is not protected and pay creditors. If your equity is within the homestead amount, there is nothing for the trustee to gain by selling, so you keep the house. In Chapter 13, you keep your property, but your plan generally has to pay creditors at least what they would have received from a Chapter 7 sale. A strong homestead exemption can keep that amount low.

There are timing rules. If you moved to California recently, or bought your home within roughly the last three and a half years, federal law may limit which exemptions you can use or cap the homestead amount. We look at these dates before you file.

Our page on bankruptcy exemptions in Whittier covers the other exemptions, like cars, retirement accounts and household goods.

The homestead exemption outside bankruptcy: judgment liens

You don't have to file bankruptcy to use the homestead exemption. It also applies when a creditor sues you, wins a judgment (a court ruling that you owe money), and tries to collect from your home.

Judgment liens

A creditor with a judgment can record it with the county recorder. That creates a judgment lien on any real estate you own in that county. The lien can make it hard to sell or refinance until it is paid.

Forced sales

To force a sale of a home that is your residence, a creditor must go to court and get an order. The court decides whether the home qualifies for the homestead exemption and how much is protected. A sale can only go forward if the bid is high enough to pay off the mortgage and other liens and pay you your full homestead amount first. In practice, with today's higher exemption, many forced sales are not worth it to the creditor.

Automatic versus declared homestead

The protection above, often called the "automatic" homestead, applies without filing anything. California also lets you record a homestead declaration with the county. A recorded declaration can give extra protection in some situations, such as when you sell the home voluntarily while a judgment lien is on it. Whether it is worth recording depends on your situation.

What this means for you

Know your rough equity. Bring a recent mortgage statement and an estimate of your home's value to your consultation.

Don't assume you'll lose the house. Since 2021, many Whittier-area homeowners can protect far more equity than they think.

Watch the dates. When you bought the home and how long you've lived in California both matter.

Worried about your home?

We can look at your equity, the current exemption amount and your debts, and tell you where you stand. Bankruptcy consultations are free, and we are available 24/7. Call (562) 612-7806 or request a consultation. You can also learn more about filing bankruptcy in Whittier.

This article is general information, not legal advice. Every case is different, and past results do not guarantee a similar outcome.

Does California have a homestead exemption?