Posted by MBCA on 7/23/06 2:00pm
Msg #134858

Declaration of Abandonmement of Declared Homestead

Search the website and couldn't find very much info on this subject.
Went to a signing the other day where the lender was present. He wanted the borrowers to sign the above mentioned document and they refused. They said they had gotten a loan before without signing such a document. The lender couldn't get a hold of anyone in his office so we had the borrowers sign it and I recorded it in my book and they are keeping possession of it until they hear from the lender. Of course, the lender is going to tell them it must be recorded. I wonder why they could get a loan in the past without taking the homestead document off their property and now they have to?

Reply by Julie/MI on 7/23/06 2:15pm
Msg #134861

I hestitate to answer since I'm not in CA, but..............

they are used when a property is in foreclosure. When I worked at Register of Deeds, and a property had gone to Sheriff's sale the borrowers that lost the home have a certain amount of time to redeem the property (hence the need for high risk, high fee lenders).

If the party that purchased the property can prove the property is abandoned, they bring the Declaration of Abondonment to the recorder's office and records it. This reduces the redemtion period. Also, makes the homeowner's insurance that the buyer at the Sheriff's sale has to pay since it is hard to insure vacant property. Many times the borrowers that are in default, will trash the place.

Reply by Kate/CA on 7/23/06 2:51pm
Msg #134863

I had a borrower who had Homesteaded his property. They did not want to sign the Abandonment either. I suggested to the the loan officer that they draw up another Homestead to be recorded after the loan went thru and let the borrower sign it and have it notarized. Then it can be recorded when all is said and done. Made the borrower happy, so was the loan officer. they faxed it to us and I was on my way.

Reply by TitleGalCA on 7/23/06 3:34pm
Msg #134875

That's the best advice for this situation, Kate. n/m

Reply by Kate/CA on 7/23/06 4:23pm
Msg #134878

Re: That's the best advice for this situation, Kate.

My borrower was a doctor, which totally amazed me that he would balk at signing the document. I believe it only proctects your property up to $125,000. I have had several borrowers have to sign them. Several times the Title Company have put the new Homestead in the package also, which is nice for the borrower and makes them feel more secure.

Reply by TitleGalCA on 7/23/06 3:12pm
Msg #134867

The intent of a declaration of homestead is to protect property from creditors up to the level of the exemption that is allowed (generally set by statute). I have no idea what the dollar amount is in California, but I do know that in order for the document to do what it is intended for, the actual situation is extremely rare in residential property.

As a result, as a title company, Homesteads are all but ignored as are Abandonments.

It surprises me that this has become such an issue for your borrowers...but who knows.....they may be in that extremely rare category.

Almost always...a friend of a friend tells someone "go record a homestead...no one can take your property or attach your equity". Thinking this is some special insight into avoiding judgments, etc. the homeowners record it and feel it is the ultimate protection for their property and it's just not so.

The lender is probably fulfilling the conditions of funding (a checklist of items) because a homestead showed on the preliminary title report.

If the lender's counsel and the title company put their heads together...they'd probably just record as is - knowing none of these Homestead issues are valid anyway.

It's making your borrowers happy at the moment......OR they know they are a few weeks away from a recorded judgment on the property.

Reply by John_NorCal on 7/23/06 6:01pm
Msg #134895

I've had both situations in my personal dealings and with loan clients. Some lenders get anal and want the homestead off, others don't care. For the ones that are anal, (in my loan officer days) I've just had another homestead drawn up and recorded after close.

For those interested here is part of the Calif civil code section covering homestead declarations:

704.730. (a) The amount of the homestead exemption is one of the
following:
(1) Fifty thousand dollars ($50,000) unless the judgment debtor or
spouse of the judgment debtor who resides in the homestead is a
person described in paragraph (2) or (3).
(2) Seventy-five thousand dollars ($75,000) if the judgment debtor
or spouse of the judgment debtor who resides in the homestead is at
the time of the attempted sale of the homestead a member of a family
unit, and there is at least one member of the family unit who owns no
interest in the homestead or whose only interest in the homestead is
a community property interest with the judgment debtor.
(3) One hundred fifty thousand dollars ($150,000) if the judgment
debtor or spouse of the judgment debtor who resides in the homestead
is at the time of the attempted sale of the homestead any one of the
following:
(A) A person 65 years of age or older.
(B) A person physically or mentally disabled and as a result of
that disability is unable to engage in substantial gainful
employment. There is a rebuttable presumption affecting the burden
of proof that a person receiving disability insurance benefit
payments under Title II or supplemental security income payments
under Title XVI of the federal Social Security Act satisfies the
requirements of this paragraph as to his or her inability to engage
in substantial gainful employment.
(C) A person 55 years of age or older with a gross annual income
of not more than fifteen thousand dollars ($15,000) or, if the
judgment debtor is married, a gross annual income, including the
gross annual income of the judgment debtor's spouse, of not more than
twenty thousand dollars ($20,000) and the sale is an involuntary
sale.

Reply by John_NorCal on 7/23/06 6:01pm
Msg #134896

I've had both situations in my personal dealings and with loan clients. Some lenders get anal and want the homestead off, others don't care. For the ones that are anal, (in my loan officer days) I've just had another homestead drawn up and recorded after close.

For those interested here is part of the Calif civil code section covering homestead declarations:

704.730. (a) The amount of the homestead exemption is one of the
following:
(1) Fifty thousand dollars ($50,000) unless the judgment debtor or
spouse of the judgment debtor who resides in the homestead is a
person described in paragraph (2) or (3).
(2) Seventy-five thousand dollars ($75,000) if the judgment debtor
or spouse of the judgment debtor who resides in the homestead is at
the time of the attempted sale of the homestead a member of a family
unit, and there is at least one member of the family unit who owns no
interest in the homestead or whose only interest in the homestead is
a community property interest with the judgment debtor.
(3) One hundred fifty thousand dollars ($150,000) if the judgment
debtor or spouse of the judgment debtor who resides in the homestead
is at the time of the attempted sale of the homestead any one of the
following:
(A) A person 65 years of age or older.
(B) A person physically or mentally disabled and as a result of
that disability is unable to engage in substantial gainful
employment. There is a rebuttable presumption affecting the burden
of proof that a person receiving disability insurance benefit
payments under Title II or supplemental security income payments
under Title XVI of the federal Social Security Act satisfies the
requirements of this paragraph as to his or her inability to engage
in substantial gainful employment.
(C) A person 55 years of age or older with a gross annual income
of not more than fifteen thousand dollars ($15,000) or, if the
judgment debtor is married, a gross annual income, including the
gross annual income of the judgment debtor's spouse, of not more than
twenty thousand dollars ($20,000) and the sale is an involuntary
sale.