Archive for October, 2011

 The word “homestead” has both a popular and a legal significance. In its popular sense, it signifies the place of the home or residence of the family. It represents the dwelling-house in which a family resides, with the usual and customary appurtenances, including the outbuildings of every kind necessary or convenient for family use, and lands used for the purposes thereof . In the legal context, homestead refers to the privilege extended to families and family members to continue to live in their home despite claims of creditors. Although homestead is traditionally described as an estate in land, under modern statutes it is in reality a monetary exemption so long as the value of the property exceeds the amount of the statutory exemption. The principal object of the creation of the homestead estate is to protect the homesteader in the enjoyment of a home and to secure to him or her shelter beyond the reach of his improvidence or financial misfortune. The law gives greater significance to the preservation of the homestead than payment of debts.

Homestead Laws

Homestead rights did not exist under the common law. Such rights are peculiar to the U.S and exist only by virtue of statute or constitutional provision. Homestead laws are designed to protect small individual property owners, such as homeowners, from the ever changing economic climate of the U.S. These laws allow an individual to register a portion of his/her real and personal property as “homestead,” thereby making that portion of the individual’s estate off-limits to most creditors. The idea behind these homestead laws is the preservation of the family farm, home, or other assets in the face of severe economic conditions.

The general rules of statutory construction apply with respect to homestead law provisions. If the meanings of the words are unambiguous, easily understood and plain, no construction or interpretation is required. Since homestead rights are preferred over the rights of creditors, statutory construction is strict towards creditors.

State laws greatly vary with respect to homestead law. Homestead exemption statutes are subject to change at any time according to the will of the state.

Persons Entitled to Homestead Exception

Homestead rights are created by statutory provisions. Most statutes provide that every person at the age of eighteen or over, married or single, residing within the state can hold a homestead exempt from attachment, execution, and forced sale. It implies natural persons regardless of marital status or lack of dependents. However, some statutes restrict homestead exemption to some combination of ranks. Restrictions are generally on the basis of marital status, head of a family, and dependents. Some jurisdictions like Arkansas limit homestead rights to the head of the family.

Generally, it is not necessary that a homestead claimant be married. However, a homestead right is not given to a man and woman living together with an unmarried status . A married couple can claim a homestead exemption on the basis of their marital status. In case of married couples, parties share the single homestead exemption. Moreover, each spouse can claim full exemption. Spouses enjoy homestead rights regardless of property ownership . A person married to a debtor is entitled to an exemption on the basis of a homestead declaration. The declaration of homestead by a non debtor spouse terminates and extinguishes the debtor’s homestead. This is to restrict a debtor from enjoying both spouses’ homestead exemptions. After declaration, spouses are entitled to a single homestead exemption.

A parent can also be a homestead holder. The dependent child must be living with the parent on the homestead property. The parent as head of the family must be controlling the family. A grandparent having a grandchild depending upon him/ her for support can be a head of the family for the purpose of a homestead exemption . An adult child supporting a parent can also be a head of the family for homestead exemption purposes.

Properties Subject to Homestead Exceptions

The rules governing the nature of property entitled to be registered as homestead property adhere to regional patterns. Real property subject to the homestead exemptions vary in value. Generally, an undivided interest in real estate, accompanied by the exclusive occupancy of the premises by the owner of such interest and his/her family as a home, is sufficient to support a homestead exemption. Property subject to homestead exemption is described in each homestead statutes. In order to claim a homestead exemption a homestead holder must enjoy the ownership and occupation of the homestead

A claim to statutory exemption for homestead is limited to:

•Value; and
•Character of the land as urban or rural.
Usually state constitutional provisions describe the monetary limit on the amount of an exemption that a debtor can claim. Such statues contain area limits on the exemption. Most states impose a dollar limit on debtors’ homestead exemptions. However, in some states, a homestead exemption is unlimited. A homestead holder has a right to hold as exemption money or profit derived from the use of homestead.

Some statutes exempt money gained from the sale of a homestead property. For a debtor to exempt money gained from the sale of a homestead property, the debtor must establish some link between the money at issue and the homestead in question. In some jurisdictions, an owner is entitled to receive the amount of the homestead exemption on sale of the homestead property. The sale can be conducted voluntarily by the owner or involuntarily by the sheriff pursuant to writ of execution .

Exclusive occupancy of the property by the claimant and family as a home has been held to be a requirement for exemption. However, two separate homestead estates cannot coextensively exist on the same premises at the same time.

Encumbrance of Homestead Property

The owner of a homestead has the right to encumber the homestead. Consent of both the spouses is manifest through the signature of both the spouses on the instrument validating the encumbrance on a homestead. The spousal signature is mandatory in all transactions pertaining to a homestead, except in the case of a purchase-money mortgage.

An owner of a homestead is free to mortgage the property in the absence of contrary stipulations in a statute. However, if there is a statutory prohibition as to the mortgage of a homestead, such mortgage shall be invalid. The mortgaged property may be subjected to sale under foreclosure. When the mortgage covers both homestead and other property, the debtor may require the mortgagor to resort to the other property first.

The Law permits the leasing of a homestead in certain limited instances. One spouse may lease the homestead lands for a reasonable term without the consent of the other spouse, provided such lease does not interfere with the use of the property as the home of the family. A lessee of a homestead cannot change the terms of a contract by entering into an agreement with only one spouse.

Regarding the matter of encumbering a homestead by the husband or wife of an insane spouse, the law differs depending on the state. While some states do not permit such a transaction, some provide procedures by which the sane spouse may obtain a court order authorizing a conveyance. In some states, alienation of the homestead of an insane person is allowed by joinder of the guardian with the sane spouse.

Conveyance of Homestead Property

The homestead estate cannot be casually conveyed. Any conveyance of the estate must be made explicitly, specifically, and in writing. Irrespective of the manner of spousal land ownership recognized in each state, generally, there exist rules that govern the conveyance of homestead property by a spouse(s).

Generally, no spouse may convey homestead property without consent.

by: USLegal,Inc.

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