A homestead exemption is a protection
granted by statute which safeguards equity in a residence of a homeowner from
judgment creditors. In Washington, this
safeguard is automatic. See Revised Code of Washington
6.13.040. Under the statute, the
exemption is automatically applied to the home as soon as it is occupied as a
principal residence by the owner.
This automatic protection is very
comforting, as a homeowner is not required to file any declaration to obtain
the protection. Homeowners have enough
to worry about when purchasing a new home!
What about when a new homeowner has
purchased a piece of property, and is interested in moving into the property as
their residence? Imagine the property is
raw land and the homeowner must rent while they are anxiously awaiting their
dream home to be built. The good news is
that Washington has a mechanism for this homeowner to claim their new home as
their homestead before moving into
the property.
The homeowner in this unique
circumstance can file a declaration of homestead and a declaration of
abandonment of homestead. With these two
documents the homeowner is not only asserting the new property as their home,
but they are denying any other property is their home. This gives the homeowner the same protections
as would be granted automatically, if they were able to move into it right
away.
This is a corner case for most people
to worry about while waiting to move into a new home. The individuals that are most benefited by
this rule are those people who are already exposed to risk of loss: individuals contemplating bankruptcy or
individuals hounded by creditors through lawsuits and/or judgments.
If your client is in such
circumstances, let them know of the option to protect their new home! Refer them to a qualified attorney to assist
in not only filing the declarations, but planning for resolving their creditor
problems permanently!
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