Homestead Waiver Law & Legal Definition
A homestead waiver is a document wherein the homeowner of spouse of a homeowner gives up the statutory homestead rights under applicable state law, often required in certain contracts, such as mortgages. A bank often includes a homestead waiver in a mortgage so that they can recoup their losses up to the full loan amount in case of foreclosure, rather than having part of the property exempt from the claims of creditors under a homestead exemption.
For example, in one state, when you record a Declaration of Homestead, the equity in your home is protected up to a statutory amount. In another state, there is no statutory limit. This protection precludes seizure or forced sale of your residence by general creditor claims (unpaid medical bills, bankruptcy, charge card debts, business & personal loans, accidents, etc.).
The following is an example of a provision in a homeowner's association agreement dealing with homestead waivers:
Each Owner hereby agrees that the Association's lien on a Lot for assessments shall be superior to the homestead exemption provided by Colorado law as amended from time to time and each Owner hereby agrees that the acceptance of the deed conveying the Owner's Lot within the Property to him shall signify the Owner's waiver of the homestead right granted by said Colorado law.
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