The word “homestead” has both a popular and a legal significance. In its popular sense it signifies the place of the home–the residence of the family: it represents the dwelling-house at which the family resides, with the usual and customary appurtenances, including the outbuildings of every kind necessary or convenient for family use, and lands used for the purposes thereof[i]. Homestead refers to the privilege extended to families and family members to continue to live in their home despite claims of creditors. A person cannot have two homesteads at the same time, and a removal from one that gains a new homestead is an abandonment of the old[ii].
The principal object of the creation of the homestead estate is to protect the homesteader in the enjoyment of a home and to secure to him or her shelter beyond the reach of his improvidence or financial misfortune[iii]. Generally, the homestead exemption law creates an exemption that precludes the seizure or forced sale of property under legal process. The homestead exemption is a right additional to and independent of the ordinary rights of ownership. Homestead status does not confer any additional property interest or rights in property. The homestead right cannot rise any higher than the right, title, or interest that the claimant owns in the property.
The purpose of the homestead exemption is to provide the debtor with the necessary shelter or the means to acquire shelter required for his welfare during difficult economic circumstances while the interest of a bank is to secure the repayment of an outstanding loan. Although homestead is traditionally described as an estate in land, under modern statutes it is in reality a monetary exemption so long as the value of the property exceeds the amount of the statutory exemption. Homestead exemption statutes are subject to change at any time according to the will of the state[iv].
A homestead is established when there is actual intent to live permanently in a place, coupled with actual use and occupancy. The intent to establish a homestead is evidenced by a debtor’s specific acts toward creating a permanent abode which are not contradicted by subsequent behavior of the debtor. Property established as a homestead retains its exempt status until it is abandoned. A homestead has been abandoned when it is no longer a bona fide home and place of permanent abode[v]. While one may voluntarily relinquish or convey one’s homestead estate, that estate cannot be involuntarily taken away or divested for any purpose. Even the commission of a criminal act will not result in the loss of the homestead estate. The homestead estate cannot be casually conveyed or waived voluntarily. Any conveyance of the estate must be made explicitly, specifically, and in writing.
The general rules of statutory construction apply with respect to homestead law provisions. If the meaning of the words is unambiguous, easily understood and plain, no construction or interpretation is required. Since homestead rights are preferred over the rights of creditors, statutory construction is strict towards creditors.
Homestead laws are for the protection of the residents of the state only. However, in some states, the out-of-state homestead property is protected under a law that does not limit protection to property within the state. The existence and extent of a homestead interest is generally determined under the law of the state where the claimed homestead property is located.
[i] Keyes v. Cyrus, 100 Cal. 322 (Cal. 1893).
[ii] In re Estate of Wallace, 1982 OK 80 (Okla. 1982).
[iii] People v. One Residence Located at 1403 E. Parham St., 251 Ill. App. 3d 198 (Ill. App. Ct. 5th Dist. 1993).
[iv] Bank of Illmo v. Simmons, 142 Ill. App. 3d 741 (Ill. App. Ct. 5th Dist. 1986).
[v] Colwell v. Royal Int’l Trading Corp. (In re Colwell), 226 B.R. 714 (S.D. Fla. 1998).