A client of mine just sent me an official-looking letter from Title Concepts Plus advising them of the need to file a homestead exemption to protect their recently purchased home from creditors.
What is a declaration of homestead? According to the San Diego County Public Law Library,
A homestead declaration is a written statement, made under penalty of perjury that claims a particular “dwelling” (for example, a house, condominium, boat, mobilehome, etc.) as the owner’s principal place of residence. This guide uses the word “home” to signify a person’s principal residence.
When a homestead declaration is (1) signed by a homeowner, (2) notarized, and (3) “recorded,” it helps to protect the home against loss to creditors.
A properly prepared and recorded homestead declaration immunizes the home (and the land on which it is situated) from many (but not all) legal enforcement measures. For example, if a homeowner files a petition in bankruptcy, it may be possible, because of a homestead declaration, to retain the home, or at least a portion of the equity in the property, instead of losing it to creditors.
What Title Concepts Plus says they will do for the $47.95 fee they want is to send you the blank forms you need, plus they will send you a completed application for a Declaration of Homestead. You can get these forms yourself for free from the Los Angeles County Clerk’s office or from their website: http://www.lavote.net/GENERAL/Form_Downloads.cfm
Title Concepts Plus isn’t doing anything necessarily illegal, it’s just misleading. If you want to pay a company $47.95 for a few sheets of paper that you can get yourself for free, there is nothing wrong with that. But imagine, about 7,000 residential properties sold in Los Angeles County in December, 2009. If you sent out the offer to that many people every month and had a 1% return, that would be about $3000, not including postage and paper costs. Not a bad little sideline. Check out this link to find the truth about homestead exemptions in California:
http://www.dca.ca.gov/publications/legal_guides/h-1.shtml
One fact noted in the above article is that a company cannot charge you more than $25 to file the Declaration for you, and that includes recording fees. But if you look at the paperwork sent by this company, they don’t offer to file or to record the document, just to send it to you. I wonder if you sent the check in to them whether you would even receive the documents back.
This website is very helpful about many legal issues and they charge less for more help:
http://www.1stoplegalforms.com/FormLs/FL_0101.asp?Page_ID=1&source=google&kw=homestead
Should you file a Declaration of Homestead? You automatically have a homestead exemption without filing anything, but a recorded Declaration of Homestead does give you some additional protection if you are likely to have an involuntary judgment recorded against you, like for nonpayment of medical bills or if you file for bankruptcy. But if you are in that kind of financial trouble, you will probably consult an attorney anyway who can advise you accurately about your particular situation. A Homestead Declaration does not absolve you of the responsibility to pay “voluntary liens†such as your mortgage and taxes, or even mechanics liens. It doesn’t save you from being obligated to pay your credit card bills, either.
There are a number of official appearing letters homeowners have received in the last few years from companies who claim they will do your Decline in Property Valuation applications or send you a copy of your Grant Deed for fees ranging from $25 to $189. This is a waste of your money! Please feel free to call or email me whenever you receive offers like these and I will be happy to check them out for you.
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