Call Kurtis: What's A Homestead Declaration? And Do I Need One?

SACRAMENTO (CBS13) — A Sacramento woman recently refinanced her home and got a questionable notice in the mail, asking her to fork over money.

She wasn't sure if she should pay so she decided to call Kurtis first.

She got this notice in the mail from a company called Title Recording Service.

It's for a homestead declaration.  What's that? And do you really need one?

"It comes with a copy of my title so it was a little confusing," said Amanda Morrow, Sacramento homeowner.

Just weeks after refinancing her home, Amanda got this notice from Title Recording Service out of Burbank.

It arrived with a copy of her actual deed.

"When I first looked at it, I thought it was actually to record my title for my refinancing," said Amanda.

This company wanted $48.95 plus notary fees to file a "declaration of homestead" with the county recorder's office.  It's a filing that protects a homeowner's equity if they are ever sued.

But we've learned you don't necessarily need one of these filings but if you want that extra protection, you can fill out the forms yourself for free.

"It's certainly on that line between scam and legitimate business," said Chris Morran, Deputy Editor, Consumerist.com.

Morran thinks these types of companies are skirting the law and are profiting from it.

"People fall for it all the time because it looks official, it sounds official," said Morran.

But we've learned this company may be breaking California state law, which says companies can charge no more than $25 for this type of service.

And on the top of their letters, They must have this box of disclosures in 12 point bold font letting people know "THIS HOMESTEAD FILING SERVICE IS NOT ASSOCIATED WITH ANY GOVERNMENT AGENCY" and "YOU DO NOT HAVE TO RECORD A HOMESTEAD DECLARATION."

But look at Title Recording Service's mailing. There's no disclosure box.

Although they do make similar disclosures in the letter in smaller print.

We reached out to the company three times but never heard back.

Amanda's glad she didn't fall for it.

"They can make a lot of money off people who are being gullible," said Amanda.

We've learned in California, you automatically have some protection without a declaration of homestead.

For individual homeowners, the amount of equity protected is up to $75,000.

Declaring your homestead won't increase that amount but it offers extra protection in some cases.