California homeowners can protect their property from creditors through the homestead exemption. This legal provision shields a portion of a home’s equity from certain debt collections, helping to preserve housing stability and prevent forced sales. This article explains how California’s homestead exemption works, its requirements, and how homeowners can use it.
Laws Protecting Homestead Rights
California law protects a homeowner’s primary residence from forced sale by creditors through the homestead exemption. This protection exempts a portion of the home’s equity. If a creditor tries to force a sale to recover a debt, a legally set amount of the sale proceeds (the exempt equity) is protected and paid to the homeowner before the creditor.
This protection can apply automatically during a forced sale, even without a prior homestead filing. California law also allows for a declared homestead (California Code of Civil Procedure 704.910).1Justia Law. California Code of Civil Procedure § 704.910 (2024) Filing a Declaration of Homestead with the county recorder’s office provides benefits like protecting proceeds from a voluntary sale for six months, allowing time to reinvest in a new homestead. A declared homestead also makes it easier to prove the property is a homestead in legal disputes.
Qualifying Properties
To qualify for California’s homestead exemption, a property must be the owner’s primary residence or dwelling, as defined by California Code of Civil Procedure 704.710.2California Public Law. California Code of Civil Procedure Section 704.710 (2025) This includes:
- Traditional houses
- Condominiums
- Mobile homes
- Manufactured homes
- Boats or other waterborne vessels, if used as the main home.
The land the dwelling is on, and related structures like garages, are also part of the homestead. The key is that the property is the homeowner’s actual home.
Residency Requirements
The property must be the owner’s principal dwelling, where they genuinely live, not an investment property or second home.
Timing and continuous residency are factors. For the automatic homestead exemption (used in forced sales), the property must be the principal home when the creditor’s lien attached and remain so until a court confirms its homestead status (California Code of Civil Procedure 704.710). Not meeting this continuous residency can result in losing protection for that debt.
For a declared homestead, the filed declaration must state the property is the principal dwelling. Temporary absences do not cancel homestead rights, provided the owner intends to return and maintain the property as their primary home. The owner’s intent and actual use help determine principal dwelling status.
Checking Your Equity
Home equity is the current market value of your home minus outstanding secured debts like mortgages. This net equity is what the homestead exemption protects, up to certain limits. To calculate your equity, estimate your home’s fair market value and subtract all secured loan balances.
California Code of Civil Procedure 704.730 sets the protected equity amount.3California Public Law. California Code of Civil Procedure Section 704.730 (2025) The exemption is the greater of $300,000 or the countywide median sale price of a single-family home in the year before the exemption is claimed, up to a maximum of $600,000. These amounts are adjusted for inflation every three years by the Judicial Council of California.4Judicial Council of California. Potential Adjustments of Dollar Amounts of Homestead Exemptions (CCP § 703.150(d)) Homeowners must verify the current figures, as the median sale price component means the actual exemption can vary by county.
If your net equity is less than or equal to the homestead exemption amount, your home is protected from a forced sale by a judgment creditor for an unsecured debt. This is because a sale wouldn’t provide funds for that creditor after your exempt amount and any senior liens are paid. If your equity is higher than the exemption, a creditor might force a sale. In such a case, you would receive your full homestead exemption amount from the sale proceeds before the judgment creditor is paid. Any remaining funds, after covering the exemption, sale costs, and senior debts, would go to the creditor.
Filing Procedures in Court
If a judgment creditor wants to force the sale of a home, California law requires specific court procedures. A creditor cannot sell the property without a court order.
The process starts when the creditor files an application for an order of sale with the court (California Code of Civil Procedure 704.740).5California Public Law. California Code of Civil Procedure Section 704.740 (2025) This application includes property details, homestead status, exemption amount, and existing lien information.
The court then sets a hearing date. The creditor must provide the homeowner with the application and a notice of hearing (California Code of Civil Procedure 704.770).6California Public Law. California Code of Civil Procedure Section 704.770 (2025) This notice gives the homeowner a chance to respond, present evidence, and contest the sale or property valuations.
At the hearing, the court determines if the home qualifies for the homestead exemption, its fair market value, the correct exemption amount, and the value of any liens (California Code of Civil Procedure 704.780).7California Public Law. California Code of Civil Procedure Section 704.780 (2025)
If the court confirms the property is a homestead and the homeowner’s equity exceeds the exemption amount plus senior liens, it may order a sale. However, a sale cannot happen unless the auction bid is high enough to cover the homestead exemption, all senior liens, and sale costs (California Code of Civil Procedure 704.800).8Justia Law. California Code of Civil Procedure § 704.800 (2024) If this minimum bid isn’t met, the sale is stopped. This ensures the homeowner receives their exempt amount if a sale occurs.
Role in Judgment Proceedings
When a creditor gets a money judgment, they can record an abstract of judgment. This creates a lien on the debtor’s real property, including their main home. California’s homestead exemption affects how this judgment lien impacts a home.
The timing of a recorded Declaration of Homestead is significant. If a homeowner records this declaration before a creditor records an abstract of judgment, the judgment lien does not attach to the declared homestead equity up to the exemption amount (California Code of Civil Procedure 704.950).9FindLaw. California Code of Civil Procedure – CCP § 704.950 The lien only attaches to surplus equity – value exceeding prior liens and the homestead exemption. This protects the exempt equity from the start.
If a Declaration of Homestead is recorded after a judgment lien, or if the homeowner uses the automatic homestead exemption, the judgment lien attaches to the entire property. However, the homestead exemption still limits the creditor’s ability to force a sale, as a sale requires bids sufficient to cover senior liens, the homestead exemption, and sale costs.
If a court-ordered sale happens, proceeds are distributed in a specific order (California Code of Civil Procedure 704.850):10Justia Law. California Code of Civil Procedure § 704.850 (2024)
- First, to satisfy liens senior to the judgment creditor’s lien.
- Next, the homeowner receives their homestead exemption amount.
- Then, sale costs are covered.
- Finally, any remaining funds go to the judgment creditor.
This prioritizes the homeowner’s protected equity.