Homestead (Homestead exemption)
1. A homestead, also known as a "homestead exemption", is a legal life estate
that is created when a family (or single person) occupies a home that they own.
It is intended to protect the home (or in some states its equity only) from
creditors and judgments. Usually the entire home, or at least a portion of it,
is protected. The purpose of a homestead exemption is to provide a place to
live for the life of the owner(s) even if he or she incurs large debts or court
judgments. In reality, most homes may be sold to satisfy debts or judgments,
even if the owner has a homestead exemption. The exemption reserves a certain
amount of money from the sale of the property for the owner, and the debts and
judgments must be satisfied with the remaining funds from the sale. The amount
of the exemption differs by state.
A homestead ends when the owner dies or transfers interest in the property to another. A homestead estate does not exempt one from real estate taxes, mortgages, or any other charge or lien which is secured by the real property itself. Not all states allow homestead exemptions, and they differ in their filing requirements. A homeowner may have only one homestead at a time, even though he or she may own multiple homes.
2. A home which is used as a primary personal residence.
Added: Fri Jan 06 2006
Last Modified: Wed Jun 25 2008