Homestead Exemption

AN OVERVIEW OF HOMESTEAD EXEMPTION, HOMESTEAD DECLARATIONS, AND HOMESTEAD EXEMPTIONS IN BANKRUPTCY UNDER UTAH LAW

THIS FLYER IS MEANT TO PROVIDE AN INTRODUCTION AND BASIC OVERVIEW OF UTAH’S HOMESTEAD EXEMPTION AND DECLARATION LAWS.  THIS FLYER DOES NOT TAKE THE PLACE OF CONSULTING A LAWYER ABOUT YOUR PARTICULAR SITUATION.  THIS FLYER DOES NOT CONSTITUTE LEGAL ADVICE.

1.                 HOMESTEAD EXEMPTION. 

An individual is entitled to a homestead exemption consisting of Utah property in an amount not exceeding $20,000 in value if the property is the “primary personal residence” of the individual.  If the property claimed as exempt is jointly owned, each joint owner is entitled to a homestead exemption.  The maximum exemption may not exceed $40,000 per household.  (Utah Code § 78-23-3). 

The term “primary personal residence” means “a dwelling or mobile home, and the land surrounding it, not exceeding one acre, as is reasonably necessary for the use of the dwelling or mobile home, in which the individual and the individual’s household reside.  An individual may claim homestead exemption in one or more parcels of real property together with appurtenances and improvements.  (Utah Code § 78-23-3(1)(c)). 

An individual is also entitled to a homestead exemption consisting of property in Utah in an amount not exceeding $10,000 if the property consists in whole or in party of property which is not the primary personal residence of the individual.  (Utah Code § 78-23-3(2)).

For example, John owns a home or mobile home worth $45,000.  John lives with his wife, who is a joint owner of the home, and their three children.  John is entitled to an exemption of $40,000 ($20,000 for him and $20,000 for his wife).  These exemptions do not apply to tax debts, any debt previously secured by the property (such as a mortgage or second mortgage), child support judgments, or any consensual liens obtained on debts created by mutual contract.  (Utah Code § 78-23-3).

2.                 HOMESTEAD EXEMPTION AND BANKRUPTCY. 

The general rule under the Bankruptcy Code is that you are entitled to claim exemptions, including homestead exemptions, under state law.  The applicable state law is determined by looking to “the place in which the debtor’s domicile has been located for the immediate 730 days prior to the date of filing.

If the debtor’s “domicile” has not been located in a single state for a 730-day period, the applicable state law is determined by looking to “the place in which the debtor’s domicile was located for 180 days immediately preceding the 730-day period or for a longer portion of such 180-day period than in any other place.”  (11 U.S.C. § 522(b)(3)(A)). 

If you have lived somewhere other than Utah in the last 2 years and are considering filing bankruptcy, you may have to use the homestead exemptions of the state where you lived previously.

3.                 HOMESTEAD DECLARATIONS. 

If you are being sued on debts you owe, and you own a house or mobile home, you may want to consider filing a homestead declaration.  Although filing a declaration is no longer necessary in order to claim this exemption. Your property may still be sold, but you will be entitled, in most instances, to receive a certain amount before your creditors are paid. 

Copies of homestead declarations for both real property and a mobile home are attached.  If a sheriff’s sale of the property has already been scheduled, you should also deliver a signed and notarized copy to the sheriff before the time of the sale.  (Utah Code § 78-23-4(1)).

Only one homestead declaration can be filed by a family.  Once a homestead declaration is filed, both spouses must consent to a sale or other transfer of the property.  (Utah Code § 78-23-4(1)).  If you file a declaration and later sell your home, the part of the proceeds protected by the declaration will be exempt for one year.  The sale and disposition of the property for which you file a homestead declaration does not prevent the selection or purchase of another homestead.  (Utah Code § 78-23-3(5)).

If you have questions about homestead declarations, you may contact your County Recorder’s Office.