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California's Major Win for Homeowners - Homestead Exemption Now Minimum $300k and Maximum of $600k

2020 has been filled with what seems like a never-ending stream of bad news and great suffering for nearly everyone. However, in a year that desperately needed silver-linings, homeowners in California just received a major win with a massively increased homestead exemption to protect their property from creditors and the trustees in bankruptcy.


What is clear from the text of the bill is that the minimum homestead exemption is $300,000 and the maximum is $600,000. For people who need to claim more than the $300,000, things get a bit tricky. The law provides as follows: "This bill would instead make the homestead exemption the greater of $300,000 OR the countywide median sale price of a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed $600,000. These amounts would adjust annually for inflation."


So, in order to determine the exact amount of one's homestead exemption, you will need to calculate this based on: 1) housing data from your county, and 2) the applicable rate and amount of inflation to adjust this by. We in the legal community are still trying to decode exactly how to apply this law when the $300,000 minimum is not enough to protect their property. One thing can be assured, this is a big win for debts and a major loss for creditors.



Assembly Bill No. 1885 CHAPTER 94 An act to amend Section 704.730 of the Code of Civil Procedure, relating to enforcement of judgments. [ Approved by Governor September 18, 2020. Filed with Secretary of State September 18, 2020. ] LEGISLATIVE COUNSEL'S DIGEST

AB 1885, Committee on Budget. Debtor exemptions: homestead exemption. Existing law provides that a specified portion of equity in a homestead, as defined, is exempt from execution to satisfy a judgment debt and prescribes that the amount of the homestead exemption is either $75,000, $100,000, or $175,000, depending on certain characteristics of the homestead’s residents. This bill would instead make the homestead exemption the greater of $300,000 or the countywide median sale price of a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed $600,000. These amounts would adjust annually for inflation. DIGEST KEY Vote: majority Appropriation: no Fiscal Committee: no Local Program: no


BILL TEXT

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Section 704.730 of the Code of Civil Procedure is amended to read: 704.730.  (a) The amount of the homestead exemption is the greater of the following: (1) The countywide median sale price for a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred thousand dollars ($600,000). (2) Three hundred thousand dollars ($300,000). (b) The amounts specified in this section shall adjust annually for inflation, beginning on January 1, 2022, based on the change in the annual California Consumer Price Index for All Urban Consumers for the prior fiscal year, published by the Department of Industrial Relations.


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