Homestead laws were generally designed to protect the home from creditors, provide the right of occupancy given to a surviving spouse, minor children, and unmarried children of a deceased owner and also afford reduced property tax treatment. When people use the term "homestead exemption" they may be referring to the tax exemption or reduction, or the exemption from debts or execution for the payment of debts. The exemption from using the homestead to pay certain debts doesn't mean that you can't lose your home to creditors or that a lien cannot be placed on the home.
If you borrow money on your home like most people do, the mortgage holder can foreclose despite the exemption. If a unsecured creditor sues you and obtains a judgment, the creditor can file the judgment as a lien on your property. However, to the extent that you have a homestead exemption, the creditor cannot execute on the homestead and take the home. Specific homestead laws vary by state. In Texas, for example, a homestead is not protected from debts owed to the federal government. Some states require a recorded claim to be filed in order to claim a homestead exemption, while other states require a designation of homestead. Almost all states require a designation in order to receive a homestead tax exemption.
In community property states, generally, either separate or community property may constitute a homestead, and a homestead owner's spouse must join in any transfer or encumbrance of a homestead. In almost all states, a surviving spouse is entitled to the sole occupancy of a homestead for life, even though the property may be owned by someone else, such as were the property is titled in the husband's name, he dies and leaves the property to his children. Local laws should be consulted for specific requirements in your area.
Homestead exemption forms are usually available form the tax assessor in your County. If not, the tax assessor can provide you with the proper location.
