Overview: Why the Homestead Exemption Matters in Los Angeles
If you're facing a judgment, foreclosure risk, or considering bankruptcy, the homestead exemption is one of the most important tools to protect equity in your principal residence. In California the homestead exemption amount is set by statute and—critically for Los Angeles County homeowners—is the greater of two values: the countywide median sale price for a single‑family home in the calendar year prior to the year the exemption is claimed (capped at $600,000), or $300,000.
Because Los Angeles County's median single‑family sale price has substantially exceeded the statutory cap in recent years, the statutory cap of $600,000 is frequently the operative number for claims in this county. For example, county sales data from the California Association of Realtors show median single‑family prices well above $600,000 in the 2024–2025 period, meaning many LA filers will see the $600,000 cap apply.
How the California Homestead Exemption Works (Key Rules)
- Statutory formula: The homestead exemption is the greater of (a) the countywide median sale price for a single‑family home in the calendar year before the year the exemption is claimed (but not more than $600,000), or (b) $300,000. This language is found in the Code of Civil Procedure and governs judgment‑enforcement homesteads.
- Types of dwellings protected: The statute covers houses, mobile homes, condominiums, stock cooperatives and similar dwellings used as the principal residence.
- Proceeds and timing: If your homestead is sold or you receive insurance or eminent‑domain proceeds, an exemption amount equal to the homestead exemption is protected for six months after receipt unless applied to a different non‑homestead asset.
- Bankruptcy context and limits: California has its own exemption scheme and has effectively opted out of the federal bankruptcy exemption list; California debtors use state exemptions and must pick the appropriate California alternative when filing. Married couples in California generally cannot "stack" the homestead exemption to double the protected amount. These rules affect strategy when a bankruptcy filing is likely.
Practical Strategies to Maximize Homestead Protection
Below are lawful, practical steps to consider if your goal is to protect as much home equity as possible in Los Angeles County. These are planning ideas — for any significant action (transfers, refinance, or bankruptcy timing) consult a qualified California bankruptcy or real‑estate attorney.
- Understand which year’s median controls your claim: The statute uses the countywide median sale price for the calendar year prior to the calendar year in which you claim the exemption. That means timing matters for filings and judgment dates. If the prior‑year median is above the $600,000 cap (as it has been in LA), the cap will likely be the operative exemption. Confirm the precise median for the relevant prior year when planning.
- Record a homestead declaration when appropriate: California permits certain homestead declarations that can help in judgment‑enforcement contexts. Recording a homestead declaration can make asserting the exemption easier in some sheriff sale or levy situations, though the declaration alone does not change the statutory dollar amount. (Recording rules and tactical effect vary—get local counsel.)
- Reduce non‑exempt equity before liens or collection actions: Where possible and lawful, paying down unsecured creditors, accelerating payments on encumbrances that secure loans, or applying exempt funds to permitted uses can reduce the portion of equity exposed to execution. Avoid transfers intended to evade creditors — courts will scrutinize recent transfers as fraudulent conveyances.
- Choose ownership and timing carefully: For married couples and co‑owners, California rules restrict stacking and impose single‑exemption limits between spouses; understand whether a joint or individual filing is required and how community‑property rules affect the available exemption.
- Evaluate federal vs. state options early: Although California has opted out of many federal exemptions, there are two alternative California exemption systems; selecting the correct one for your situation (and sticking with it for joint filers) can materially affect what you keep. Discuss selection with counsel before filing bankruptcy.
Limits, Common Pitfalls, and When to Get Legal Help
Limits to expect: The homestead exemption only protects equity up to the statutory amount (frequently the $600,000 cap in LA County). It does not eliminate secured debts (like a mortgage) — lenders with valid security interests can still foreclose unless you cure or reaffirm the debt. Exemption protection also does not shelter third‑party liens (mechanic's liens, some tax liens) in all situations.
Watch for trustee and creditor challenges: Courts and trustees can challenge recent transfers, overbroad exemption claims, or attempts to evade creditors. Recording a homestead declaration does not immunize fraudulent or untimely transfers.
Next steps: 1) Confirm the exact county median sale price for the calendar year relevant to your claim (county/CAR reports); 2) gather deeds, mortgage statements, payoff figures, and any homestead declarations; 3) speak promptly with a Los Angeles bankruptcy or consumer‑credit attorney who can model outcomes (bankruptcy vs. judgment enforcement vs. loan‑workout) and advise whether to record documents, time a filing, or pursue alternatives to litigation. For statutory text and practical overviews see the California Code of Civil Procedure and reputable local legal guides.