Monday, April 7, 2014

Homestead Protection in Nevada

As in every other state, the public policy of the State of Nevada is to avoid leaving its citizens homeless and penniless because of a negative result in a lawsuit.  So the state legislature, codified under NRS 21, has provided a list of assets that cannot be taken from you by a creditor (a person or entity who has obtained a judgment against you).  Relative to the rest of the country, Nevada is generous when it comes to these "exempt assets."  The state is especially benevolent in protecting your house.

NRS 21.090(l) provides that your homestead is exempt from execution to satisfy a judgment.  NRS 115 governs how to make the homestead declaration effective.  Simply desiring it to be true isn't enough.

To qualify, title must be in your name (or the name of your revocable living trust, provided you are its beneficiary), and you must reside on the property. 

You can certainly pay one of the many homestead recording services who will stuff your mailbox in the first few weeks after your purchase or title change on your property.  They charge $25 to $50 plus the county recording fee ($18 in Clark County).  But you can also do it yourself.  The county provides the form to do so here and also offers a nice overview on what's involved here.  You'll need your property's parcel number (you should be able to find that on a property tax notice or by pulling up the recorded deed on your property here).  Then check off your filing status, the type of property you are declaring as your homestead, and the name on title.  You'll also need the legal description of your property which you'll find on your most recent deed.  From there you'll sign before a notary and mail it to or visit the recorder's office for recording.

I include preparation and recording at no charge (aside from the recording fee) for my estate planning clients.

A few more notes about homestead declarations:
  • Per NRS 115.020(5), moving an already "homesteaded" property into your revocable trust, so long as you are its beneficiary, will not require you to re-file.  However, if the beneficial owner changes, re-filing is necessary to secure the protection.
  • The exemption protects you up to $550,000 in equity, not just fair market value.
  • Obviously, claiming homestead protection will not protect you from your bank's mortgage or home equity line of credit (NRS 115.010(3)), among a few other specific creditors.
  • A creditor can still place a lien against your property, but has no power to force its sale.  However, if the property's equity is greater than $550,000, then a judicial partition/forced sale is possible.
  • OJ Simpson famously took advantage of Florida's unlimited homestead protection.  It allowed him to move there, dump a ton of cash in a sprawling and expensive estate, and have it all protected from civil judgments that were eventually entered against him.
In short, taking an hour or so to follow through on filing a homestead declaration is worth your time.  It's a relatively simple process, inexpensive, and along with your homeowner's insurance policy, the first line of defense in asset protection.

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