Lawmaker To Attempt To Lift State Homestead Exemption Limit To Attract Wealthy To Move To Nevada

Buried at the end of a story on a proposed new law to safeguard Nevada tenants unwittingly renting homes from landlords in foreclosure, the Las Vegas Sun reports:

• [L]egislators and local governments so far have asked that 633 bills be drafted for introduction next year. [One] recent request comes from Assemblyman Morse Arberry, D-Las Vegas, who wants to remove the cap of $550,000 on homestead exemptions.(1)

• The law protects the forced sale [except for mortgage foreclosures] of a home whose value is up to $550,000 to recover a debt if the property has been designated as a homestead. The 2007 Legislature raised the homestead exemption from $350,000 to $550,000.

• And Arberry said he is working on a bill to eliminate the cap as a way to attract rich people to locate in Nevada. Otherwise if these affluent people had a $1 million home that was designated as a homestead, it would be shielded from judgments to collect any debt [except home mortgages and certain other debts].

• The present law provides that if the home is worth more than $550,000, a judge must appoint three independent appraisers to value the home. If it exceeds the homestead exemption permitted, the judge must decide whether any part of the property can be sold to satisfy the debt without “material injury” to the home. If the judge decides the property can not be divided, than [sic] he can order home sold and the money divided between the creditor and the homeowner.

For the story, see Bill to protect renters in foreclosure cases.

(1) If successful, Nevada will be eligible for induction into the Homestead Exemption Hall of Fame, joining the great states of Florida, Texas, Oklahoma, Kansas, and Iowa who likewise impose no dollar limit on the amount of home equity (ie. loosely defined for homestead exemption purposes, as home value less existing home mortgages, unpaid real estate taxes, IRS tax liens, and unpaid home improvement costs - check the relevant state law for the exact specifics) a state resident can play "keep away" with when fending off unsecured general and judgment creditors seeking repayment of debts they've been stiffed on. There are, however, limitations based on property size, such a limit may depend on whether the home is located within or outside of an incorporated municipality (or, in the case of Texas, whether state law considers the homestead to be an "urban homestead" or a "rural homestead").