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 $550,000. 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 $750,000 and you have a mortgage of $600,000, then your equity is $150,000 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.
While this re-recording of a Declaration of Homestead may seem to be 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 Declaration of Homestead does not guarantee anything, it may afford you “your day in court.”
More info on Declaration of Homestead
Quick Claim USA and their employees are not attorneys in the State of Nevada or in any other State or Jurisdiction. Quick Claim USA is not licensed to give legal advice and may not accept fees for giving legal advice. Should you have questions regarding any of the above items, you must seek the advice of independent legal/tax counsel of your choosing.