I received an email earlier today from a past client asking me if the homestead act they had filed when they purchased was still valid after they refinanced.
The answer is NO.
I have heard different attorneys give different answers to that questions, and I had 1 attorney once respond "That there are different schools of thought on this issue......".
The only school I want and am interested in is protection! Real estate agents and attorneys have always assumed that the exemption was subordinate to a pre-existing mortgage, but believed the Homestead otherwise remained valid when a new refinance mortgage was recorded after the Homestead.
However, in the case of a refinance the exemption is rendered null and void.
Essentially, as a homeowner, a Homestead Exemption is not valid after a refinancing unless you re-file it after the time of the refinancing, or otherwise reserve it at the time of refinance.
Another situation that could cause the un-intentional lapse in protection is death. Only 1 person in a marriage can declare the homestead (called the declarant) and it covers the spouse and the minor children. If the declarant passes away the homestead act is terminated. The surviving spouse needs to file a new homestead act in their name.
With all the refinancing that occurred several years back, and the unfortunate state of our economy it is very advisable that everyone makes sure their homestead act is still valid and protecting them and their home.
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