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Homestead Summary

The Basics of Colorado’s Homestead Exemption Law

In accordance with §§ 38-41-201 et seq., Colorado’s Revised Statutes (C.R.S.), every homestead in the state of Colorado is exempt up to $60,000 from execution and attachment arising from any debt, contract, or civil obligation, as long as the property is occupied as a home by its owner or an owner’s family. The exemption jumps to $90,000 if the property is occupied as a home by an elderly or disabled owner, an elderly or disabled spouse of an owner, or an elderly or disabled dependent of an owner. “Elderly” in this context means an individual who is sixty years of age or older, and “disabled” means having a physical or mental impairment that substantially precludes the individual from engaging in a useful occupation. The homestead may consist of a house and lot or lots or of a farm consisting of any number of acres, as well as a mobile home, manufactured home, or registered trailer or trailer coach.

Ceasing to occupy a homestead raises a presumption of abandonment of the right to the exemption. To rebut this presumption, the person claiming the homestead exemption must show that removal from the home was temporary and made for a specific purpose, and that he or she intended to reoccupy the premises.

When a person seeking to claim the homestead exemption files for bankruptcy, litigation often revolves around whether the individual abandoned the home before filing for bankruptcy. The fact that the debtor is not residing in the home on the bankruptcy petition date creates a presumption of abandonment, but again, this can be rebutted by proof that the absence from the home was only temporary (for example, two months) and that the debtor always intended to return to live in the home.

Clearly, it is often advantageous to continue to live at the property you intend to claim as your homestead. However, Colorado law also recognizes the need for families to move and provides equivalent protections in that case as well. The proceeds earned in the sale of the home are exempt for the same respective amounts of $60,000 or $90,000 for up to two years following the sale of the homestead property. To preserve this right, the person entitled to the exemption must keep the proceeds separate and apart from other moneys so that the proceeds may always be identified. If the proceeds are then used in the acquisition of other property for a home, the same homestead exemption that the owner was entitled to for the previous property is carried over to the new property, but this new homestead exemption is not valid as against one entitled to a vendor’s lien or the holder of a purchase money mortgage against the new property.

Please be advised that this Article only scratches the surface of the issue. Consult with an attorney before basing any decision on this summary.

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