At Lucas Real Estate Group, we often assist clients navigating real estate transactions that intersect with complex financial, legal, and estate planning matters. People often ask about “asset protection” which is often misunderstood and/or exaggerated, and while we do not handle estate planning (that’s it’s own speciality), we do handle all aspects of your real estate holdings, including LLCs, which can be an exceptional option for liability protection, privacy and other reasons.
One crucial tool that can offer some peace of mind in “asset protection” — is the California Homestead Exemption.
A Brief History of the Homestead Exemption
The concept of the homestead exemption traces its roots to Texas in the 1830s, when it was still an independent republic seeking to attract settlers. To encourage permanent residency, Texas passed laws shielding homeowners from losing their farms or dwellings to creditors. The strategy worked—sparking a wave of similar protections across the United States.
Today, states like Texas and Florida still offer unlimited homestead protections. While California had long lagged behind, offering confusing and modest limits, that changed with the passage of Assembly Bill 1885, which took effect on January 1, 2021. This landmark legislation modernized California’s exemption amounts and tied them to local real estate values—offering significant protection in high-cost areas like Newport Beach, Corona del Mar, and Eastside Costa Mesa.
How Much Equity Is Protected?
As of 2025, California’s homestead exemption protects the greater of:
- $313,200, or
- The countywide median sale price for a single-family home in the prior calendar year, not to exceed $626,400.
These figures are adjusted annually for inflation. In 2023, for example, the inflation-adjusted protection ranged between $339,189 and $678,378. Given the high property values across Newport Beach, Dover Shores, Newport Heights, and surrounding areas, many local homeowners benefit from the upper tier of this exemption.
Automatic vs. Declared Homestead – What’s the Difference?
There are two types of homestead protections in California:
Automatic Homestead
No paperwork is needed. If the property is your primary residence, state law offers limited protection of your equity automatically. However, this only applies if a creditor forces the sale of your home—not if you sell it voluntarily.
Declared Homestead
A recorded document filed with the county recorder. A declared homestead offers enhanced protection, including:
- Protection of proceeds for up to six months after a voluntary sale—allowing time to purchase a replacement home.
- Coverage even when judgment creditors attempt to collect during that interim period.
This extra layer of protection can be essential for clients involved in trust administration, divorce proceedings, estate liquidations, or any situation where assets may be subject to litigation or creditor claims.
When Should You Consider Filing a Declared Homestead?
While everyone with a primary residence benefits from the automatic exemption, we recommend filing a Declared Homestead if:
- You’re concerned about creditor lawsuits or judgments.
- You are going through a divorce, estate distribution, or trust transfer.
- You plan to sell your home and purchase another primary residence.
- You want peace of mind and more predictable legal protection.
The process is relatively simple — a form, have it notarized, and record it with the county. Our team can assist clients with this process as part of a larger real estate or estate planning strategy or a stand alone service.
What a Homestead Exemption Does Not Protect Against
It’s important to know the limits of the homestead exemption. It does not protect against:
- Foreclosure from your mortgage lender if you’re behind on payments
- Mechanic’s liens for unpaid contractor work
- Judgments for child or spousal support
That said, for most clients looking to shield equity from general creditors, the homestead exemption remains an incredibly valuable tool—especially when coupled with other asset protection strategies.
Tailored Guidance for Coastal Orange County Homeowners
At Lucas Real Estate Group, we combine real estate sales expertise with legal and tax insight to help clients make fully informed decisions—whether you’re selling a long-time family home, administering a trust, or seeking to protect assets for future generations.
We are especially adept at guiding trustees, families, and high-net-worth individuals through complex and sensitive transactions. Many of our real estate sales involve discreet handling of legal and tax issues behind the scenes. We live and work in Newport Beach, Eastside Costa Mesa, and surrounding neighborhoods, and we understand the local real estate landscape and the legal framework affecting your property.
Final Thoughts
If you’re a homeowner in Newport Beach, Corona del Mar, Lido Isle, or anywhere in Orange County, the homestead exemption could offer meaningful protection for your most valuable asset—your home.
Whether you’re seeking to better understand your options or looking to integrate homestead protection into a broader trust, estate, or real estate sale strategy, we’re here to help.
Call us at (949) 478-1623 or email [email protected] to schedule a private consultation.
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Lucas Real Estate Group is a top-rated residential real estate team based in Newport Beach, led by Devin R. Lucas – a Real Estate Attorney, Broker, and REALTOR®, and Courtney Lucas – CPA and REALTOR®. We specialize in trust sales, intra-family transfers, luxury transactions, and confidential representation, offering unmatched experience in California property tax law, Proposition 19, and beyond.
Serving Newport Beach, Eastside Costa Mesa, and surrounding Orange County communities
(949) 478-1623 | [email protected]
www.lucas-real-estate.com
2901 West Coast Highway, Suite 200, Newport Beach, CA 92663
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– Devin Lucas
Author Devin R. Lucas is a Real Estate Broker, REALTOR® and Real Estate Attorney specializing in Newport Beach, Costa Mesa, and Orange County coastal communities. Courtney Lucas, a licensed CPA, Real Estate Salesperson, and REALTOR®, provides expert financial insight alongside real estate services. Together, they lead Lucas Real Estate, operating in conjunction with Coldwell Banker, the region’s premier luxury brokerage.
Lucas Real Estate offers unmatched expertise in California real estate sales, property management, capital gains strategies, and property tax matters, including Propositions 13, 58, 193, 60, 90, and new Proposition 19.
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sources:
- Assembly Bill 1885 (California Homestead Exemption Reform). California Legislative Information: AB 1885 Bill Text
- California Code of Civil Procedure § 704.730. Legal statute defining homestead exemption limits and structure: CA Code § 704.730
- California Consumer Price Index (CCPI). Used to calculate annual homestead exemption adjustments: Department of Industrial Relations – CCPI
- Lawyers Title – Homestead Declaration Flyer (2023).
- Texas State Historical Association (TSHA) – Homestead Law. Historical origin of the homestead exemption: TSHA Handbook Article
- California State Controller’s Office – Homestead Exemption Information. Additional legal and procedural guidance for homeowners: sco.ca.gov
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