Authored By: The Mississippi Bar
"Homestead" generally refers to a family's dwelling and the land upon which the dwelling rests. Under Mississippi law, families have the right to keep a certain portion of their homestead exempt from creditors. Specifically, the law exempts 160 acres or $75,000 in equity, whichever is lower, from the reach of creditors. The sole requirement of a property owner to receive this exemption is to occupy the property as his or her primary residence. However, if a spouse is over 60 years of age, he or she can still maintain that exemption, even if the property is no longer the primary residence.
To declare a homestead exemption, the property owner must file a claim with the county tax assessor's office. Along with protecting the property from creditors, filing for homestead exemption also benefits the homeowner through a reduction in property taxes.
The homestead law's intent is to keep families on their property. In the case of a property owner's death, the homestead exemption extends to the surviving spouse or to the couple's children of minor age. This prevents the deceased's creditors from making a claim on the property.
Situations do arise in which the homeowner does not reside on the property, yet the law honors the homestead exemption. For example, if a situation forces a person off his or her property, as in the case of a wife's escaping an abusing husband, the wife can claim the homestead right in a future divorce or other legal proceeding.
Under Mississippi law, a spouse cannot mortgage homestead property without the signed consent of the other spouse. In fact, any attempt to transfer the title to the property to another person without the written consent of the spouse is void.
Homestead exemption laws strive to give a homeowner the assurance that the development of bad credit cannot threaten the family's security of having a roof over their heads. However, homestead exemption is not automatic, but is dependent upon the homeowner's filing the claim with the county. Along with being a tax savings to the property owner, this simple procedure may prove someday to be the difference between remaining in your home and turning it over to creditors.
Because a home may be a person's most valuable asset, creditors may try to seize the property in exchange for debts owed and past due. A homeowner should be aware of those possibilities and take the necessary steps to prevent such action. When creditors do come to call, an attorney can be helpful in preventing the loss of the home.
When buying a house, most people finance the purchase by borrowing money from a bank or other financial institution. The lender will require the borrower to sign a promissory note and deed of trust, more commonly known as a mortgage. The company holds the mortgage on the house until the entire loan is paid.
If the borrower ever fails to make a mortgage payment, the lender has the right to call for immediate payment of the entire loan. If the homeowner is unable to pay, the deed of trust allows the lender to foreclose on the property and sell it to recoup its investment. This process can occur in as little as 30 days. Quick action by the homeowner may prevent the foreclosure or sale.
A similar situation is possible when a homeowner borrows money to make home improvements. Among the documents the lender may require is a second deed of trust on the home. Just as in the original financing, if the homeowner fails to make a payment, foreclosure can occur.
However, federal law gives the homeowner the right to cancel the loan within three days of signing the loan papers. The law also requires the lender to give the borrower notice of his or her right to cancel. If the lender fails to give notice, the borrower can cancel at any time.
If a homeowner contracts to have home repairs done but fails to pay for the work in accordance with the agreement, the house is in danger of being lost. The contractor may file a mechanics lien against the property and force the sale of the property.
Subcontractors may file similar liens if they are not paid by the contractor. To prevent this from happening, the homeowner can demand from the contractor written lien waivers from all the subcontractors providing materials or services for work described in the contract. Mississippi law requires the homeowner be given notice of the right to these waivers.
Another expense of homeownership is the city and county taxes on the property. Failure to pay these taxes can force the sale of the home for taxes. Prompt action can prevent this from occurring or even enable the owner to regain the home after the sale.
Homeownership is also in jeopardy when the owner loses a lawsuit and owes money. The court can place a judgment lien against the house, allowing for the sale of the property to satisfy the amount owed.
Owning a home can bring great satisfaction, security, and tax benefits. However, great responsibility also rests with the homeowner to manage any incurred debt and make payments on time. Failure to do so can possibly cause the loss of one's greatest financial asset.