As the old saying goes, a “man’s house is his castle.” This well-known legal maxim is one of the most deeply rooted principles in the American legal system1)See Weeks v. United States, 232 U.S. 383, 390 (1914) discussing the influence of the common-law maxim on the Supreme Court., and embodies the idea that an individual’s home is a place of refuge from the cares of everyday life. However, just like a castle relies upon a moat, draw bridge, towering stone walls and the like to help keep the castle safe from outside threats, a person’s home must have certain protections in place that allow the resident to retain possession of the home, or the refuge provided by the home would be seriously undermined by the risk of losing the property to others.
One of the most serious threats to a person’s ability to keep their home is creditors, who can be likened to modern day marauders who would love nothing more than to storm the castle and kick the occupant(s) out on the streets. Creditors are in the business of collecting money. Period. If a creditor is not getting paid they often seek to forcibly take the money that they are owed through the legal system by any means possible. If there is equity in a person’s home that is not protected by law, and that person has not paid a creditor money that is owed under the law, then the creditor can potentially put a lien on the home and forcibly sell it in order to get paid from the equity available. The scary thing is that although a person may not currently owe any creditors on outstanding debts, it does not mean that an unexpected debt could not arise from any number of scenarios such as: liability in a car accident, a failed business venture, unexpected health or medical expenses, etc. Fortunately, as mentioned above, the law has long recognized the importance of an individual’s home, and, in most cases, provides for a way of protecting a person’s primary residence.
How the Homestead Exemption Protects You
The protection available in Nevada for an individual’s primary residence is referred to as the Homestead Exemption. The homestead exemption protects up to $550,0002)Although the homestead exemption allowed under Nevada law allows for $550,000 of protected equity, in bankruptcy cases, federal bankruptcy law limits the amount of protected equity in the home if the home was purchased less than 1215 days prior to the claimed exemption. If the home was purchased more than 1215 day prior, then the full extent of Nevada’s homestead exemption is available. of equity in a person’s home. This protection only applies to a person’s primary residence. Investment properties, rental properties, vacant land, etc. do not receive protection from Nevada’s homestead laws. Also, to invoke the homestead protections offered by Nevada law, it is necessary to record a Declaration of Homestead3)The form for Nevada’s Declaration of Homestead can be obtained here with the county recorder in the county where the property is located. Once the declaration is recorded with the county recorder’s office, the home will be protected as that individual’s homestead as long as the individual remains living in that home.
Of course, the homestead exemption does not allow an individual to keep his or her home if s/he fails to pay a mortgage that was obtained by using the home as collateral. The exemption does protect against “outside” creditors like credit card companies, payday loans, judgment creditors, etc. It is recommended that you speak with an attorney to discuss the full impact of declaring your personal residence to be a homestead so that you can erect legal protective barriers between your home and a host of potentially devastating results.
Footnotes [ + ]
|1.||↑||See Weeks v. United States, 232 U.S. 383, 390 (1914) discussing the influence of the common-law maxim on the Supreme Court.|
|2.||↑||Although the homestead exemption allowed under Nevada law allows for $550,000 of protected equity, in bankruptcy cases, federal bankruptcy law limits the amount of protected equity in the home if the home was purchased less than 1215 days prior to the claimed exemption. If the home was purchased more than 1215 day prior, then the full extent of Nevada’s homestead exemption is available.|
|3.||↑||The form for Nevada’s Declaration of Homestead can be obtained here|