Arkansas Homestead Act

A review, the Arkansas Homestead Act
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The Arkansas Homestead Act is a law designed to provide residents with certain protections against creditors. Indeed, the extent of the exemption provided for homestead property under Arkansas law is broad. The Arkansas homestead exemption plays a particularly important role in bankruptcy cases.


The legislature created the Arkansas Homestead Act in 1868. The intent of the law was to protect Arkansas families from want and dependence, according to the Arkansas Bar Association. The concept of protecting families as opposed to individual creditors carries forth to this date in Arkansas.


The function of the Arkansas homestead exemption is to protect the primary residence of either a married Arkansas couple or a single person with minor children. The law prevents certain creditors from placing liens and attempting to seize the primary residence of these classifications of people.


The laws in a majority of states in the country place a cap on the total amount of equity that exists in a primary residence that is subject to homestead exemption protection. Such is not the case in Arkansas. There is no limit on the value of a homestead nor on the amount of equity accumulated in that residence. Appellate courts in Arkansas consistently ruled to confirm that there is no ceiling on the value of exempt homestead property, according to the Arkansas Bar Association.


The Arkansas Homestead Act places limitations on the size of property claimed as homestead. Within an incorporated city, the size of the lot must be no more than one-quarter of an acre. Eighty acres in a rural areas can be claimed as exempt.

10-Year Reach Back

A recurring practice in Arkansas involved individuals facing financial problems selling non-exempt assets like stocks and putting the proceeds into their homestead properties. In other words, in anticipation of bankruptcy, these individuals converted assets that would have been subject to distribution to creditors in bankruptcy into cash that was then used to pay down the loans on their homestead properties.

Arkansas bankruptcy provisions now permit the bankruptcy court to reach back 10 years to examine whether any such transactions were made. If these types of transactions are identified, the amount of money involved is not protected by the homestead exemption.

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