In the unfortunate event of a bankruptcy, many states have homestead protection laws intended to protect people from losing their homes. These statutes can allow homeowners to set aside a piece of real property, or a "homestead," which would remain off limits to certain types of creditors. This is an introduction to homestead laws in Alabama.
Alabama Homestead Statutes
Alabama’s homestead statute, like other state homestead laws, places a limit on acreage and value that can be designated as a homestead. However, the limits differ between Alabama’s constitution (limiting homesteads to 80 acres and $2,000) and its statutory code (limiting homesteads to 160 acres and $5,000). Homestead protections in Alabama are highlighted in the table below.
| Code Section | Code of Alabama 6-10-2: Homestead Exemption; Alabama Constitution Art. X, §205: Homestead not exceeding eighty acres or city, town or village lot not exceeding two thousand dollars in value exempt from sale, execution or other process of court issued for collection of debt; exception as to mortgages. |
| Max. Property Value That May Be Designated 'Homestead' | Const.: $2,000; Stat.: $5,000 |
| Maximum Acreage (Urban) | Const.: Lot Stat.: Lot or track |
| Maximum Acreage (Rural) | Const.: 80 acres; Stat.: 160 acres |
Even with these homestead protections in place, it is possible to be forced to sell or forfeit property under four general exceptions:
Additionally, the Yellowhammer State’s homestead protections are confined to state law, meaning federal law can override it subject to the Supremacy Clause of the United States Constitution. For example, if you have any federal income tax liens, those could be superior to Alabama’s homestead exemptions. That being said, the Internal Revenue Service has been reluctant to foreclose on a citizen’s home in order to collect on a tax debt and normally only gets involved if the homestead property is mortgaged or sold off before the tax lien expires.
Alabama Homestead Laws: Related Resources
Real estate and bankruptcy laws can be difficult to understand. You can contact an Alabama bankruptcy attorney or an Alabama real estate attorney if you would like legal assistance with a bankruptcy or real estate matter. You can also visit FindLaw’s homestead protections section for additional articles and information on this topic.
