On May 12,2021, Governor Jay Inslee Signed into law the most sweeping change of the homestead laws in over 15 years. This change will be a great benefit to homeowners, particularly those struggling with debt.
Homestead laws have existed since the creation of the state of Washington. The law is designed to protect a personal residence from creditors claims. However, traditionally there was a dollar limit to the protection. When I first began practicing law the homestead limit was $25,000. The amount was increased to $30,000 in 1987 and then to $40,000 in 1999. In 2007 the legislature increased to $125,000. For many years this amount has been more than sufficient to protect the vast majority of homeowners. However, as the price of homes, particularly in Western Washington, increased dramatically, the homestead became less protection.
In the beginning of the 2021 Washington legislative session, Northwest Consumer Law Center and members of the debtor creditor section of the Washington State Bar sponsored legislation to make a sweeping change to homestead law. The proposed change had amazingly high bipartisan support and passed both houses of the legislature by an almost unanimous vote. The law became effective when the Governor signed the bill.
The most significant aspect of this law is that the homestead law is based upon the greater of $125,000 or the median residential home price in the county in which the claimant resides. As an example, the median home price in Kitsap County for 2020 was approximately $436,000. Therefore, if a homeowners residence, after deducting the mortgage, is worth less than that amount, is/her property is fully protected from creditor claims.
This change in the law will provide tremendous relief for those who are already struggling with significant other debt. They may now qualify for a Chapter 7 without worrying that their house could be sold by a bankruptcy trustee to pay the bills. Consumers should all be very grateful for the hard work of those who sponsored and lobbied for this legislation.