The homestead laws were made to provide protection to homeowners from the creditors, in case of deteriorating economical condition. It also gives the surviving family member the right of occupancy in case the owner is deceased. The law also offers reduction in property tax.
Homestead laws mainly provide homestead exemption to the people facing financial crisis. This exemption is included in the state statutes or the constitutional provisions all across the United States. These statutes were passed with an intention of providing the family, a peaceful lodging irrespective of their monetary adversity. These laws were established with the view that, the significance of a homestead is greater as compared to the payment of debts.
Features of Homestead Exemption:
We can summarize the features provided by homestead exemption laws into three general features:
• If due to some reasons the debtor dies, this law entitles the surviving spouse to get a secure shelter.
• The debtor’s house cannot be sold forcefully, in order to convene with the demands of the creditors.
• The debtor’s home receives an exemption from any sort of property tax that is applicable.
A financial value is used by the homestead exemptions for determining the tax exemption that is to be provided. This value is determined by assessing the value of the homes as compared to the taxes. This procedure is followed to ensure that after the assessment, the homes found to have a lower value can get the most benefit of the exemption.
The state laws decide the amount that is to be exempted. In some of the states, the homeowners are eligible to get exemptions without any sort of limitations, where as some states do not grant any exemptions at all. There are also some states where, in case of bankruptcy, exemption is given automatically. Where as, in majority of states, the debtor in order to get an exemption, will have to first file for bankruptcy. But when a debtor gets an exemption from the state, it doesn’t mean that the debtor would no longer have to pay his creditors.