8.08 Homesteads


In General

The definition of a homestead is jurisdictional. Its meaning and application depend exclusively upon the geographical location of the land and the purpose of its utilization.

Among a homestead's most common meanings, the following may be cited:

  • Land acquired by occupation out of the public domain for agricultural or ranching purposes.

  • A tract of land owned and occupied as the family home.

  • The Federal Housing Administrator's Urban Homestead program.

  • The basis for the partial exemption of real property from real estate taxation.

  • That place or property, distinct from the home of a family, that is used and occupied by the head of a family as a business place, and which if qualifying under statute, may be entitled to certain exemptions.

  • In probate proceedings, that property set apart by statute for the benefit and use of a surviving spouse and the minor children out of the common property or out of the property belonging exclusively to the deceased.

  • That property, occupied as a home by the owner and the owner's family, which, if qualifying under statute, may be shielded to some maximum value from execution and forced sale by creditors.

  • Under section 522(d)(1) of the Bankruptcy Act: "The debtor's aggregate interest, not to exceed $7,500 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor."


Protective Nature Of The Homestead

Protection of the family against eviction from their home by the enforcement of the claims of creditors:

  • The homestead may be exempt from sale under execution of judgment against a person having an interest in the land.
  • The homestead may be exempt from claims and sales in bankruptcy proceedings.

Protection for the surviving spouse after the death of the other spouse.

Virtually all states provide for a probate homestead of one year up to life, which is a homestead set apart by the probate court for the use of the surviving spouse and the minor children free from the claims of creditors. The probate homestead may be selected from either the common property belonging to the spouses or the real estate belonging to the deceased. This property is not considered to be taken by right of survivorship, but rather is set aside by law from the Decedent's estate for the benefit of the Decedent's survivors. The homestead rights of the deceased generally continue for the benefit of the surviving spouse subject to certain limitations.

Protection against the alienation or encumbrance of the homestead except when the husband and wife have joined together in conveying or encumbering the homestead.

Protection in the levy and assessment of ad valorem taxes.

Some states provide for a homestead tax exemption, which exempts a percentage of the appraised value of the homestead from real property taxes. For this tax exemption to apply, the homestead must be classified or designated as a homestead by the proper taxing authority. The tax savings has been referred to as the preferential tax, homestead exemption, or the homestead tax reduction.


Extent Of Homestead Rights

Homestead rights are not unlimited. They are subject to certain limitations, exclusions, or requirements imposed by the federal or statutory instruments that create them.

These limitations, exclusions, or requirements may affect or be based in any or all of the following areas:

  • Kind of property - City, farming, ranching, or business.
  • Maximum value of the property.
  • Extension of the property. - Area or acreage.
  • Contiguity of Parcels of land (if more than one).
  • Occupancy as a residence.
  • Person or persons entitled to claim the exemption.
  • The meaning of Head of the Family or Head of the Household.
  • Amount of the exemption.
  • Manner in which the exemption must be established.
  • Manner in which the exception must be claimed.
  • Preferential creditors, claimants, or lienholders.
  • Interest upon which the exemption may be claimed.

State law must be fully scrutinized in order to determine the limitations of the homestead rights in any specific jurisdiction.


Legal Sources Of Homestead Rights

Homestead rights do not exist under common law. They are exclusive creatures of state constitutions and statutes.

Generally, homestead rights are established or granted in any or several of the following:

  • State constitution (constitutional homestead).
  • State statutes (statutory homestead).
  • Probate Code (probate homestead).
  • Bankruptcy Act (bankruptcy homestead).
  • Federal legislation.

Additionally, jurisdictional court decisions constitute a constant source of interpretation and guidance in the application of the provisions of homestead laws.


Claims Enforceable Against the Homestead

As a general rule, the homestead exemption applies to all debts not excepted by constitutional or statutory provisions.

However, it is well recognized that the homestead exemption is not absolute. In many states, homestead property may be subject to forced sale or execution for a variety of liens or claims taking precedence over any claim of homestead.

Examples of claims that may take precedence over homestead rights are the following:

  • Federal tax liens (in all states). We require releases of federal tax liens in all cases (except as provided in section 6.08.3G as to some tenants by entireties), notwithstanding section 6334 which provides that the principal residence of a taxpayer is exempt from levy in the absence of a jeopardy determination of written approval by the district director or assistant district director of the I.R.S. of the levy. This provision of the Code does not clearly negate the notice of lien and also relates to a factual determination of the principal residence of the taxpayer.

  • State taxes

  • Purchase money mortgages

  • Mortgages

  • Mechanic's liens

  • Pre-existing liens or claims that attached to the property before the homestead is claimed as homestead.

  • Vendors' liens

  • Alimony payments

  • Child support payments

  • Claims of former spouses

  • Claims arising from civil and criminal misconduct.

State law must be fully scrutinized in order to determine which claims are enforceable against the homestead property in any specific jurisdiction.


Claim And Selection Of Homestead

Though occupancy for residence purposes is usually sufficient to confer homestead exemption, many states require that the owner and occupant record a declaration of homestead prior to the creation of a judgment lien. In some other states, no formal declaration is necessary.

State law must be fully scrutinized in order to determine the formalities and jurisdictional requirements before an owner or occupant can claim the property as a homestead.


Sales Or Encumbrances Of The Homestead

In the absence of any specific constitutional prohibition, the owners of a homestead property may sell or encumber it. However, the instrument by which it is conveyed or encumbered must be executed in strict compliance with any pertinent constitutional or statutory provisions. Generally, those provisions relate to the following:

  • Execution of the instrument

    The instrument must be executed by both husband and wife (when this relation exists).

  • Purpose of the mortgage

The mortgage must be either a purchase money mortgage or one executed for the purpose of making improvements on the property.

In some states, a mortgage on a homestead must include a clause releasing and waiving homestead rights, and in some others, a mortgage signed by the spouse of the mortgagor should contain a clause stating that the spouse thereby waives all dower rights as against the mortgagee. Homestead rights can never be waived in a minority of states.

State law must be fully scrutinized in order to determine the specific conditions for sales or encumbrances of the homestead property in any specific jurisdiction.


Federal Tax Liens Of Homestead Rights

Because homestead rights have no priority over federal tax liens, a federal tax lien can be enforced against homestead property.


May A Single Person Designate A Homestead?

Some states allow single persons to designate a piece of land as homestead property, but others do not.

State law must be fully scrutinized in order to determine whether a single person may designate property as homestead property.



Homestead rights, once acquired, are not lost or terminated except by some specific act or omission on the part of the owners, such as any of the following:

  • Abandonment

    Abandonment occurs when the property is vacated without intention to return. The Company does not rely upon a mere representation of abandonment.

  • Acquisition of another homestead.

    The Company does not rely upon a mere representation of the acquisition of another homestead.

  • Alienation

    The voluntary and complete transfer of title to homestead property from one person to another.

  • Waiver

    The renunciation of the right to the homestead exemption. Generally, a joiner of both spouses in the instrument or waiver is essential in those jurisdictions that permit waiver of a homestead.

In some special situations, waiver may be implied from the circumstances (failure to object to the sale of the homestead premises under execution or other legal process or specific consent to the sale).

State law must be fully scrutinized in order to determine the causes for termination of the homestead rights in any specific jurisdiction.


Title Insurance Consideration

Homestead laws are extremely technical and jurisdictional. They vary from state to state and are not uniform in their wording, nature, or scope of the homestead exemption.

In some states, the homestead exemption may provide immunity from the claims of creditors. In other states, the exemption may serve to restrict the conveyancing or encumbering of the property. Finally, in other states, the exemption may award surviving spouses and children shares out of a Decedent's estate, which may or may not be property which a homestead exemption would normally benefit.

Great care must be exercised when applying homestead law for the purpose of issuing without exceptions to certain rights, liens, or encumbrances affecting the property. In this area, all doubts should be resolved in favor of raising an exception.