California Homestead Exemption in Bankruptcy

Homestead protection laws allow homeowners to declare some real property as “homesteads” during bankruptcy and other legal proceedings. This prevents creditors from seizing the property to pay off judgment liens. California law gives homeowners an automatic homestead exemption based on the median home value in the area.

Homestead exemption laws help owners keep their principal residence during financial difficulties. There are some restrictions to the California homeowner’s exemption. Homeowners considering bankruptcy should discuss methods of protecting their assets with a bankruptcy attorney.

California Homestead Exemption Laws

California has two types of homestead exemptions. The automatic exemption applies to all homes once purchased. The second is a “declared” exemption. You must file the declaration with the County Recorder‘s office in your home county.

Automatic Homestead Exemptions

The California automatic homestead exemption prevents forced sales by creditors. In other words, if you file a bankruptcy and a creditor wants a judge to order you to sell your house to pay your debts, they cannot force you to sell just because you have that much equity in the home, according to the California Code of Civil Procedure.

To qualify for the automatic exemption, a homeowner must:

• Live in the residence: The exemption only protects the principal residence. If you own a multi-unit property and live in one unit, the exemption only protects that unit.
• Own the property: The exemption does not protect leaseholders or someone who acquires the property as a “remainderman.” This means someone who receives the property upon the death of a life estate holder.

A primary residence can be a:

• Single-family home
• Condo or duplex (if spouses live separately in both units, then both units are primary residences)
• Mobile home and the property where the it sits (if the individual owns the property and rents the mobile home, the homestead exemption applies to the land, but not the mobile home)
• Trailers, under the same exclusions as mobile homes
• Boats (“vessels”), if it is the primary dwelling

An automatic exemption will not protect homeowners against:

• Foreclosure for missed mortgage payments
• Lenders holding a deed of trust
• Property tax liens
• Mechanic’s liens and contractor liens
• Money judgments for arrearages in spousal or child support

The automatic exemption protects between $377,215 to $753,430 as of 2026. Under state law, this amount is adjusted annually based on the countywide median sales price of comparable homes.

Declared Homestead Exemption

The declared homestead exemption adds some additional protection for a portion of your home equity from a voluntary sale, forced sale, or bankruptcy. This exemption requires filing paperwork and it provides protection up to six months after the sale of the home.

To get a declared homestead exemption, you must:

• Obtain and complete the Declared Homestead Exemption form from the county recorder’s office in your county of residence.
• Sign the form (all owners on the property deed must sign)
• Have the form notarized
• File the form with the County Recorder’s office (contact the office first for recording fees)

Any companies offering to assist you with completing and filing your homestead exemption documents cannot charge more than $25. This does not include notary and recording fees charged by the county.

Special Considerations

California has a separate homestead exemption for disabled veterans and surviving spouses of disabled veterans. Veterans and spouses may also file an annual request for Low-Income Exemption, which can run concurrently with the Homestead Exemption.

There is no acreage limit on either urban or rural property. Case law provides some historical limits on large rural properties (over 500 acres), but as long as the property is the owner’s principal residence, it falls under the homestead exemption.

A declared homestead exemption remains in effect until:

• The sale of the property (homestead exemptions are not transferable)
• The owner no longer uses it as their primary residence
• The property is ineligible for other reasons

A declared homestead exemption can keep your primary home in your hands.

Get Legal Advice From a California Bankruptcy Attorney

To file a Declaration of Homestead, visit the County Recorder’s office of the county where the property is located. You can also consult a bankruptcy or real estate attorney in your area. Even though you’re not filing a bankruptcy, these attorneys can explain what you should do to protect your equity and other assets before a judgment becomes a reality.