How to File a Declaration of Homestead to Protect Your Home

Quick answer: A declaration of homestead is a form you record with your county to protect equity in your home. In some states, like California and Massachusetts, filing one gives you more protection than the automatic rules do. It can help shield your home if an MCA funder wins a judgment on your personal guarantee. File it early, before any lien hits, and get a lawyer to check your state’s rules.

You run a business. You signed a merchant cash advance. Now payments are slipping. And one fear keeps you up at night. Can they take my house?

A merchant cash advance (MCA) is a lump sum of cash. In return, the funder takes a cut of your future sales. Most MCA contracts also have a personal guarantee. That means you promise to pay with your own money if the business does not.

Here is what funders do not tell you. Your home may have a shield already. In some states, you can make that shield stronger with one form. It is called a declaration of homestead.

This is a battle plan for your front door. Let’s walk through it.

What Is a Declaration of Homestead?

A homestead exemption is a state law. It protects some or all of the equity in the home you live in. Equity is what your home is worth, minus what you owe on it.

Every state handles this its own way. Some states protect you automatically. Others give you extra protection only if you file a paper. That paper is the declaration.

You record it at your county recorder or Registry of Deeds. Recording means the county adds it to the public land records. Then creditors are on notice.

Which States Use a Recorded Homestead?

Here are a few examples. Laws change, so always check the current rules.

• California. Since January 1, 2021, the homestead amount is the greater of $300,000 or the county median home price, capped at $600,000. It adjusts for inflation each year. A recorded declaration adds two things. Under Code of Civil Procedure section 704.950, it can stop new judgment liens from attaching to protected equity. Under section 704.960, if you sell your home, the protected cash stays safe for six months so you can buy a new one.
• Massachusetts. Under Chapter 188, you get $125,000 of protection automatically. A recorded declaration raises it to $500,000. Owners who are 62 or older, or who have a disability, can each claim $500,000. The usual filing fee is about $35.
• Florida and Texas. These states protect your home with no dollar cap. But they limit land size. Florida allows half an acre in a city or 160 acres outside one. Texas allows 10 acres in a city. Rural families get up to 200 acres.

Why Timing Matters in an MCA Fight

Know your enemy. An MCA funder cannot touch your home just because you missed a payment. First, they usually need a judgment. A judgment is a court ruling that you owe the money. Then they record it as a lien on your property.

Here is the catch. In Massachusetts, the bigger declared protection only covers liens placed after you record. Liens that came first can still be collected. So waiting until after a lawsuit can cost you.

From my years in the MCA industry, I can tell you this. Funders often see the personal guarantee as their real leverage. Many count on owners panicking about the house. A recorded homestead takes some of that fear off the table.

Example: How the Math Works

This is an example only. Say you live in Massachusetts.

• Your home is worth $700,000.
• You owe $450,000 on your mortgage.
• Your equity is $250,000.

With only the automatic $125,000, about $125,000 of equity is exposed. With a recorded declaration, up to $500,000 is protected. In this example, all $250,000 of equity would be covered.

What a Homestead Will Not Do

Be honest about the limits. A homestead is a shield, not a magic wall.

1. It does not stop your mortgage. Voluntary liens, like a mortgage or deed of trust, come first.
2. It does not cover liens you agreed to. If an MCA funder asked you to sign a lien on your home, that is voluntary. Read every page before you sign.
3. It does not protect a business building. It covers the home you live in.
4. It may not stop taxes or child support. Those debts often beat the exemption.
5. It may be capped in bankruptcy. Federal law at 11 U.S.C. 522(p) can limit a homestead you bought within about 1,215 days before filing. Since April 1, 2025, that cap is $214,000. See our guide to bankruptcy timing for MCA defense.

Stay on the Right Side of the Law

Filing a homestead for the home you already live in is a lawful right. Moving money around to dodge a creditor is not.

Do not pull cash out of the business and pay down your home to hide it. Do not buy a bigger house to shelter money from a judgment. Courts can undo this. In Florida, section 222.30 lets a creditor reverse a “fraudulent asset conversion.” That means turning assets into exempt ones with intent to hinder a creditor. A creditor has up to four years to challenge it. Hiding or moving assets to beat a creditor can be illegal. It is called a fraudulent transfer.

Talk to a lawyer before you make any move. For more lawful steps, read our judgment proof strategy for asset protection.

Your Battle Checklist

• Look up your state’s homestead law and amount.
• Find out if your state uses a recorded declaration.
• Get the form from your county recorder or Registry of Deeds.
• Sign it, notarize it if required, and record it.
• Keep a copy with your MCA contracts.
• Check your home’s title for any liens already there.
• Never sign a lien on your home for an MCA without legal advice.
• Talk to a lawyer before you file or move any asset.

If payments are already slipping, start with our guide on what to do if you can’t make your MCA payment.

Common Questions

Can an MCA company take my house if I default? Usually not right away. They first need a court judgment on your personal guarantee. Then your state’s homestead law decides how much equity stays protected.

Do I need a declaration of homestead if my state is automatic? Maybe. In states like California and Massachusetts, a recorded declaration adds more protection. In other states it may not add anything. Ask a local lawyer.

Is it too late to file a homestead after an MCA lawsuit? Not always, but it can be weaker. Some states only protect against liens recorded after your filing. Act early and get legal advice.

You Are Not Alone in the Fight

This war is hard, but you do not fight it alone. Join the MCA Wars Discussion group on Facebook to talk with owners on the same frontline. Subscribe to MCA Wars for new battle plans each week.

Facing an MCA default or a UCC lien? A UCC lien is a public claim a funder files on your business assets. Get Your Free Case Review at StopUCC

This article is for education only. It is not legal, financial, or tax advice. Laws are different in each state. Talk to a qualified professional before you make decisions about your business debt.

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