California’s Homestead Exemption Bill’s Impact on Title and Escrow
Homestead exemptions lower the real estate property taxes that are due and that a title company pays on the owner’s behalf during the escrow closing process. In California, homestead exemptions also provide financial protection from certain amounts of equity when a creditor tries to enforce money judgments on personal residences.
These financial protections, however, don’t typically apply when property taxes, state or federal tax liens, assessment liens or voluntary liens, including deeds of trust, are being enforced.
Assembly Bill 1885
AB 1885, which took effect on January 1, 2021, increased the amount of financial protection. The homeowner exemption amount is based upon the countywide median sale price for a single-family home in the calendar year prior to the year the judgment debtor claims the exemption. The homeowner exemption amounts are to be adjusted for inflation on January 1 each year, based on the prior fiscal year’s annual California Consumer Price Index for All Urban Consumers.
Financial protection from the homeowner exemption prior to AB 1885
$75,000 for a single homeowner
$100,000 for married couples or heads of household
$175,000 for those over 65 years old or disabled
Increased financial protection from the homeowner exemption for 2021
The greater of:
The countywide median sale price for a single family home in 2020, not to exceed $600,000
$300,000
Increased financial protection from the homeowner exemption for 2022
The greater of:
The countywide median sale price for a single-family home in 2021, not to exceed $626,400
$313,200
