Often times when first meeting clients and going through and establishing what their current risk management looks like we find that many people do not have Nevada Homestead on their primary home. While this isn’t necessarily a horrible thing, it is inexpensive to protect yourself utilizing this act with a simple declaration form.
The Homestead Act was put in place to help residents protect their home equity from creditors. While it does have a few loopholes and some lawsuits will still supersede this act, putting your home on file with the homestead act is
If so, you are not the only one. First and foremost, the homestead laws here in Nevada will allow you, the homeowner to state there is a limited portion of your property as a “homestead”. By doing this it will spare that portion from creditors in case you ever decide to file for bankruptcy, or you find yourself in other financial hardships.
Homesteading your home was first intended to protect those families from completely losing their farms. But as the time progressed homestead laws can now be placed on residential cooperatives, homes, and even condos.
You should keep in mind that the state of Nevada’s homestead laws has an automatic exemption that can protect your equity in your home only up to $550,000.
What The Homestead Act Provides:
When you record a Declaration of Homestead, Nevada law protects the equity in your home up to $550,000 from general creditor claims (unpaid medical bills, bankruptcy, charge card debts, business/personal loans, accidents) but would not preclude a seizure or forced sale of your residence from general creditors if your equity exceeds the $550,000. A creditor may file suit and can record a judgment lien against any real property you own. Recording a Declaration of Homestead protects your principal residence up to the statutory maximum. For example, if the value of your home is $645,000 and you have a first mortgage of $485,000 plus a second mortgage of $10,000, the equity is $150,000.
What is not Protected by the Homestead Act
The Homestead law does not protect you against debts secured by a mortgage or deed of trust, payment of taxes, IRS lien, mechanic’s lien, child support or alimony payments.
Purpose of Homestead Your Home Law & Nevada Homestead Exemption
When you go through bankruptcy you will typically have to sell ALL your assets to pay back your debts. So, the main purpose of having this homestead law is to help prevent you from being homeless in the off chance you must file for bankruptcy.
When is the Best Time to File for a Homestead Declaration?
No one can ever predict when a sudden incapacity or a sudden death will happen. So, as a rule, it is vital that you file a Declaration of the Homestead form soon after finalizing the purchase of your home.
As previously mentioned, this will protect your home up to $550,000 in your home equity.
How File for Homestead in Nevada
Now that we have discussed what homesteading your home is and how it can help, you have probably decided this is the best course of action for you.
Now, you are thinking what’s next? How do I get started? Here’s step by step guide on how you can file for homestead in the state of Nevada.
You need to print out the Declaration of Homestead form.
You will need to obtain a copy of your homestead’s recorded deed. This deed will have information that you will need in order to fully complete the Declaration of the Homestead form.
If in the event you do not have the recorded deed, you will need to contact the county office to get a copy immediately. You will not be permitted to go farther until you have this vital information.
Now, that you have all the required information handy, you can fully complete the Declaration of the Homestead form. You will be required to include the parcel number and even the legal description of your homestead. This information will be located on that copy of the recorded deed.
You will also be required to include your marital status, your name, and your address.
When you get to the “Name on Title Property” part of the Declaration of the Homestead form, you will need to put your name and the name of anyone else that owns the property exactly like they are on the copy of your recorded deed.
You must finally claim that you are the current resident of the homestead as well.
Once the entire form is filled out with the required information. It will be time to bring the Declaration of the Homestead to a notary.
You will be required to sign the Declaration of the Homestead in front of the notary. The notary will then sign it, stamp it and date it.
After you leave the notaries office, you can file the Declaration of the homestead in your local county office.
However, prior to going you should contact the office to find out what their processing fees are as well as if you should mail it or hand it in at the office directly. Each county does things a little bit different.
Wait, I think I have over $550,000 in Equity of my Home. Now What?
If you’ve filed and you suspect that your equity in your home is over $550,000 and you just received a judgment against you, have no fear. It’s not time to worry about it just yet.
The judge in the case will send out three appraisers. These appraisers will come out to value your property and how much equity you have in it. The appraiser will then decide if the property could be divided in a way to protect you and your home while you pay off the judgment creditors.
If there is not any way, they can divide the homestead to protect it, and ultimately the property will need to be sold. You will then get $550,000 from the sale, which no one could touch to pay off your judgment.
If your assets are outside the protection provided by The Homestead Act it is probably time to consult an Estate Planning Attorney for more comprehensive protection documents like a Trust, Medical/Financial Powers of Attorney, and/or Will. We recommend using whom you trust most but we trust the attorneys are Borg Law Group with our own personal planning so I would highly recommend them to anyone who asked for a trusted resource.