Duplex, ADUs, Apartments, Buildings and California Homestead Exemption
Does the California Homestead protect a separate dwelling unit?
Is a duplex or apartment protected by the California homestead exemption? What about a separate building like an ADU on the same lot. Or a very large lot. It depends.
Accessory dwelling units (or ADUs) are becoming quite common in California. The question is whether the Calif homestead is broad enough to cover ADUs. The California homestead exemption lets someone in a bankruptcy protect some or all of the equity in their residence. What are the limits of this though?
Starting with a common scenario: if someone rents out a room in their home, is the unpartitioned house now subject to limited protection? What if it becomes partitioned?
The issue only gets more complicated from there. Debtors can live in a duplex or apartment building they own, but how extensive (or limited) is the asset protection of the homestead exemption in California? What about a home on a (very large) lot? Two dwellings or ADUs on a lot? Let’s take a look.