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Delaware Homestead Laws

Practically every state in the U.S. has homestead protection laws intended to protect land and homeowners from losing real estate and property in the event of a bankruptcy. These statutes can allow an individual to set aside a parcel of real property, or "homestead," which would remain off limits to certain types of creditors. Here is a brief summary of homestead laws in Delaware.

Homestead laws originally were intended to protect families from losing their farms. Homestead laws now apply to homes and other residences, including condos and residential cooperatives. Delaware's homestead law calls for an automatic exemption that protects equity in a home up to $125,000 (as of 2012). Also, for disabled persons unable to work or a married couple where one spouse is at least 65 years old, the homestead exemption is also $125,000. However, the property must be the principal residence.

Learn more about Delaware's homestead laws in the table and in-depth information that follows it. See FindLaw's Bankruptcy and Land Use Laws sections for related articles and resources.

Code Section Tit. 10 §4902 (personal property); Tit. 22 §1002
Max. Property Value That May Be Designated 'Homestead' $75 trade, business in New Castle, Sussex County; $50 trade, business in Kent County; homestead exemption for persons 65 and older to be determined by local ordinance
Maximum Acreage (Urban) -
Maximum Acreage (Rural) -

Purpose of Homestead Laws

One main purpose of homestead laws is to prevent homelessness in the event of bankruptcy. A person who goes through bankruptcy will always have fewer assets than they have liabilities. A bankruptcy proceeding will generally require a person to sell all of their assets in order to pay for their debts, which requires selling a house to pay for the debts. Because they have sold all of their other assets to pay for their debts, they may not have any money to fall back on to find housing after the bankruptcy.

How Delaware Homestead Applies

As previously mentioned, homestead laws generally apply during a bankruptcy proceeding. Delaware's $125,000 homestead allotment protects that home equity from creditors. This means that if the equity invested in the home is less than $125,000, the person may not have to sell the home. If the equity in the home is greater than $125,000 the person may have to sell their home, because creditors are able to take any equity in a home over $125,000.

Get Legal Help in Delaware

If you would like to know more about how homestead applies to your residence, and whether you can take advantage of the homestead laws in a bankruptcy or other forced sale, there are many attorneys with bankruptcy experience throughout Delaware who may be able to help. In addition to helping you with homestead questions, they may also be able to advise you on the benefits and drawbacks of a bankruptcy, and help you plan a bankruptcy if you so choose.

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