A group of lobbyists, hired by some of the country’s largest banks, tried to convince the Nevada Legislature to reduce the homestead exemption from its current amount of $550,000. A homestead exemption is a statutory protection that exempts your primary residence from execution by your creditors. In Nevada, pursuant to N.R.S. 21.090, the homestead exemption amount is up to $550,000. However, a homeowner must file a homestead declaration in order to claim such exemption. The declaration must be recorded with the Clark County Recorder’s office. Consequently, if a homeowner filed the proper homestead declaration, a creditor cannot force a homeowner to sell their property if the homeowners equity (difference between what the homeowner owes and the value of the property) in their property is less than $550,000.
Further, in bankruptcy, a homeowner will be allowed to retain his home as long as the equity in such home is less than $550,000. However, under the bankruptcy law, the homeowner must have lived in Nevada for at least 40 months (three years and four months) before the homeowner can claim the Nevada homestead protection. If the homeowner has not lived in Nevada for 40 months, the homeowner is limited to the federal homestead exemption amount of $146,450.
Luckily, the proposed bill was defeated, and as such, the homestead exemption in Nevada remains at $550,000. Therefore, in conclusion, if a homeowner is lucky enough to have equity in their home, and this equity is less than $550,000, a creditor cannot force the homeowner to sell the property and, if applicable, the homeowner may retain the home even if he files bankruptcy.