Nevada is one of many states that allow a homeowner to file a Declaration of Homestead. In Nevada, this Declaration of Homestead protects the equity in your primary residence up to $605,000. This protects you from an unsecured creditor putting a claim or lien on your property and then getting a judgement to force you to sell to pay off the debt. It’s important to note it is Equity not Value of the primary residence. If you own a home worth $500,000 and you have a mortgage of $400,000, then your equity is $100,000 which would be covered if you properly record a Declaration of Homestead in the correct jurisdiction.
What many people don’t realize is that the Declaration of Homestead must follow the most current recorded Deed which reflects the current ownership. Let’s look at a common scenario.
Mr. and Mrs. Buyer purchase a home and record a Declaration of Homestead. Sometime later, they do their estate planning and transfer the property into their Living Trust. Most people would assume that the Homestead is still valid, however it may not be because it does not reflect the current ownership. The Trust is now the owner of the property, so a new Declaration of Homestead should be recorded.
Let’s assume that Mr. and Mrs. Buyer did record a new Homestead in the name of the Living Trust. Sometime later, they refinanced their home. In doing the refinance, it is customary that the Lender will require the ownership of their property to be in the individual names of the borrowers. After the refinance is completed, the home needs to be transferred back to the Trust and a new Declaration of Homestead needs to be recorded again.
While this additional recording of a Declaration of Homestead may seem to be a hassle, it is a simple process and can help avoid potential future issues. Remember that if a general creditor files a claim, if you have not recorded a proper Declaration of Homestead, you may not have a leg to stand on. While having recorded the Declaration of Homestead does not guarantee anything, it may afford you “your day in court”.
Disclaimer: We are not attorneys, CPAs, or tax advisors in the state of Nevada or any other state. We are not licensed to give legal, tax, or financial advice, nor may we accept fees for doing so. Nothing in this information, digital content, social media channels, profiles, or website is intended to be or should be considered legal, financial, or tax advice. Laws, statutes, tax codes, lending policies, guidelines, programs, and more are subject to change. Social media and website content may not be fully up-to-date. Information is provided “as is” without any guarantees, warranties, or representations, implied or otherwise. Each legal matter is unique and specific. Therefore, QC Deed, LLC, DBA: Quick Claim USA, encourages every individual and business to seek professional guidance from legal counsel and qualified or certified professionals regarding their specific legal, tax, or financial matters.
