Montana's Homestead Act provides families with security from creditors who are attempting to collect debts. The homestead provisions allow owners to claim up to $250,000 of their home's value when debt collectors pursue their collection efforts. "Homesteading" allows property owners to claim their properties as off-limits to preserve their family homes, farms, and in Montana, even mobile homes.
Residents of Montana who are seeking protection from creditors can use their state's homestead declaration. The Homestead Act protects the value of homes up to $250,000 in Montana. Therefore, Montanans who owe less than $250,000 may be able to shelter their home from creditors.
To declare exemption, Montana residents must fill out the Declaration of Homestead as required by Section 70-32-201 of Montana's Annotated Code. Once signed and notarized, citizens must record the declaration with the local clerk's office in the county where the property is located. As of 2009, the recording fees were $6 for every page recorded. The exemption also protects the fixtures or improvements to the house that become part of the permanent realty, also known as legal appurtenances.
A homestead property is a home or mobile home, even if the person does not own the land on which the mobile home is located. The property must be the resident's permanent home and not an investment home. Protection does not include the personal property within the home. The homestead protection might not apply to bankruptcy creditors. Furthermore, the exemption will not apply to construction service or materials' suppliers' liens to lenders who seek to collect unpaid mortgage amounts, or to Medicaid liens. The exemption also might not apply to creditors' judgments obtained prior to the recording of the Declaration of Homestead. Because laws change frequently, this information should not be used as a substitute for competent legal advice from a licensed Montana attorney.
The homestead exemption protects up to $250,000 from creditors. Therefore, creditors could petition a Montana court for a forced sale of the land, known as a partition. If the value from the forced sale exceeds $250,000, then creditors might be able to collect the remaining sale amount. Additionally, the exemption is limited to 18 months after the sale. After 18 months, you can no longer claim homestead protection.
If the owner of the home is married, then both spouses must sign the declaration. Under Montana law, even though a spouse is not listed on the property deed, Montana courts still recognize it as marital property. Unless both spouses sign, it might not be properly exempted under the homestead act.