Home Sweet Homestead
Posted on January 10, 2019 by Paul Spadafora
UPDATE: On May 12, 2021, Washington enacted significant revisions to the Homestead statutes. These revisions may potentially and significantly increase the dollar amount of your homestead exemption. As of May 12, 2021, the homestead exemption has changed to be the greater of 1) $125,000.00, or 2) the “county median sale price of a single-family home in the preceding calendar year.” RCW 6.13.030(1). The new statutes also define how the “county median sale price of a single-family home” is calculated. This change will significantly increase the equity in your home which is protected under the homestead exemption.
To most people, home ownership means more than just shelter and security. Home ownership is a major achievement on your path to self-sufficiency, and a place where some of the best memories for you and your family reside. With the past decade’s incredible growth in Seattle’s real estate market, your home may represent your single largest financial investment, and be part of your retirement plan. However, to a creditor or the victim in an automobile collision, your family home is something else entirely: a high-value asset in the pool of money they can collect from you.
Most states, including Washington, recognize that a home is different than any other asset you might own. These states have laws which provide special protections for a person’s primary home, or “homestead.” Under the homestead laws, some or all of the value of a person’s primary home is exempt from execution by judgment creditors. In other words, homestead laws make sure that a bad business decision or an accident won’t leave you and your family homeless.
Washington State’s homestead laws exempts a homestead from being taken by the Court or from a forced sale to satisfy a judgment creditor. Unlike many states, however, Washington State’s homestead exemption is capped. In Washington, the homestead exemption only applies to the first $125,000.00 in value of the home, and the first $15,000.00 in value of personal property. If you have more than $125,000.00 in equity in your home, a judgment creditor might still be able to force the sale of your home to satisfy the judgment. If that happens, any amount of money over and above $125,000.00 is available for a creditor to take to satisfy their judgment.
Even if that happens, a forced sale of your homestead property comes with certain conditions. Most importantly, you have one full year from the date of the sale to pay the judgment creditor off in another way. If you exercise this “redemption right,” the sale is reversed, and you can reclaim title to your home.
Depending upon your circumstances, there are a number of other exemptions to homestead protection which might apply to you. For example, the homestead exemption won’t protect your assets when you default on your mortgage, or owe child support or alimony. If you have questions about how to adequately protect your home or other assets, or if someone is bring a lawsuit against you, the experienced asset protection and litigation attorneys at Lasher Holzapfel Sperry & Ebberson are available to help. Please call our office today at (206) 624-1230.