Washington State Legislature Significantly Amends Homestead Law Effective May 12, 2021

Release Date: 
Thu, 05/13/2021

The Washington State legislature has enacted significant changes to the Washington homestead statute. The Engrossed Substitute Senate Bill 5408 (link is external) became effective when signed by Governor Inslee on May 12, 2021.

In general, the law provides for increases in homestead exemptions based on “the county median sale price of a single-family home in the preceding year.”

The Final Bill Report summarizes the impact of the new law as follows:

Homestead includes real or personal property a dependent of the owner uses as a residence. A dependent has the same meaning as in federal bankruptcy code. A dependent of a homeowner is not required to sign off on any documents needed to transfer the property.

A forced sale is defined to include any sale of the homestead property in a bankruptcy proceeding. The reinvestment provisions do not apply to the proceeds. This adopts the holding of the court in the decision of In re Good [588 B.R. 573 (Bankr. W.D. Wash. 2018)].

The homestead exemption amount is the greater of $125,000 or the county median sale price of a single family home in the preceding calendar year. A court shall accept data on the county median sale price of a single family home from the Washington Center for Real Estate Research, or if the Washington Center for Real Estate Research no longer provides the data, a successor entity designated by the Office of Financial Management. [This data can be found here under the "Annual Median Price” tab.

In a bankruptcy case, the debtor's exemption shall be determined on the date the bankruptcy petition is filed. If the value of the debtor's interest in homestead property on the petition date is less than or equal to the amount that can be exempted under the homestead law, then the debtor's entire interest in the property, including the debtor's right to possession and interests of no monetary value, is exempt. Any appreciation in the value of the debtor's exempt interest in the property during the bankruptcy case is also exempt, even if it exceeds the statutory limit. This language is to address the case of Wilson v. Rigby [909 F.3d 306 (2018)].”

An article with practice tips related to the homestead statute is included on the WAWB Best Practices Page.