In historical context we commonly think of the word homestead, or homesteading, as referring to what our ancestors did in settling this continent. For example, the Fulbrights homesteaded in Ingomar in 1915. However, when looked at in a different context, homesteads, or homesteading, can refer to many of us. Today, let’s talk about homestead declarations, which is one of our MontGuides that are free and available to the public.
By signing a homestead declaration, Montanans can protect up to $250,000 in value of a home against most creditors’ claims. A homestead is the house or mobile home that a person lives in and land on which it sits. The property must be a person’s primary residence for it to be eligible for a homestead declaration. This may include a mobile or manufactured home where the owner doesn’t own the land.
The maximum value of exempt property for the homestead declaration, as I mentioned, is $250,000. If the value of the property exceeds $250,000, creditors may request the district court to partition the land and sell part of it or all of it. If the property is sold, the person who filed the declaration has protection for the first $250,000 of proceeds. An example of how this works could be as follows: Joe owns a house that has an assessed value of $80,000 with a $50,000 mortgage balance. Joe’s homestead declaration protects only the $30,000 equity Joe has in the house. In another example, Doug owns a house that has an assessed value of $275,000 with a mortgage balance of $10,000, thus leaving an equity of $265,000. Once again, the owner is only protected up to $250,000 so the remaining $15,000 in equity is available to creditors. Additionally, creditors could force the sale of the home to recover part or all of the debt they are owed.
There are specific instances in which it is unjust, according to the Montana Legislature, to provide a homestead exemption. First, if a judgment against a homeowner occurs before a homestead declaration is filed. Also, a homestead declaration provides no protection against liens. A homestead declaration further provides no protection for failure to pay the mortgage.
For copies of the homestead declaration form you can google Montana homestead declarations, or an attorney can also help a person execute a homestead declaration. The homestead declaration is then recorded at the Clerk and Recorder’s office. If you have further questions about homestead declarations, I would encourage you to pick up a copy of the MontGuide about it at your local county Extension office or visit with your preferred legal professional.