Memorandum of Decision Re: Homestead Exemption

Debtor(s). ______________________________________/
Memorandum re Objection to Homestead Exemption

Debtor William Montgomery and his wife resided at the real property at 681 Deer Park Road, Saint Helena, California, from 1993 until November, 2000, when he moved out due to fear of violence from his wife. He made every effort thereafter to recover possession of the home, including obtaining a state court order that his wife vacate and bringing an unlawful detainer action against other persons who were living on the property without permission. His intent at all times was to return to the property, repair it and sell it.

Montgomery finally got possession of the home about July 11, 2002, the day he filed his Chapter 7 bankruptcy petition. Montgomery has claimed the property exempt under California Code of Civil Procedure § 704.910 et seq. For reasons not quite clear to the court, the Chapter 7 trustee objects.The debtor originally claimed the home exempt under the “automatic” homestead exemption set forth in CCP § 704.710 et seq., but later amended his schedules to claim the home under the “declared” homestead exemption of § 704.910 et seq. The parties agree that Montgomery did record a declaration of homestead, so the law applicable to declared homesteads controls. The trustee stills seems to be arguing law applicable to automatic homesteads. Given that Montgomery vacated his home due to fear of domestic violence, the court doubts the trustee’s position would be sustained even if he had not recorded a homestead declaration. Nonetheless, the amendment to the schedules seems to leave the trustee with no coherent basis for objection. (1)

Under California law, a declared homestead remains exempt even if the debtor has not resided in the property for many years, so long as he has done nothing to abandon his homestead rights. 37 Cal.Jur.3d, Homesteads, § 60. A spouse is not deprived of his or her homestead rights when he or she has been forced from the home due to fear of violence from the other spouse. Michelman v. Frye (1965) 238 Cal.App.2d 698, 705-06. Montgomery has done nothing to abandon his homestead rights.

The trustee seems to confuse intent to sell with intent to abandon. A debtor does not abandon homestead rights merely because bad memories compel moving to a new home; the proceeds of exempt property remain exempt for six months after sale. Cal. Code of Civil Proc. § 704.960(a). There would be no point to this provision if intent to sell resulted in forfeiture of the exemption.

For the foregoing reasons, the trustee’s objection to the exemption will be overruled. Counsel for the debtor shall submit an appropriate form of order.

Dated:    October 10, 2002                                ___________________________
Alan Jaroslovsky
U.S. Bankruptcy Judge
1. The debtor originally claimed the home exempt under the “automatic” homestead exemption set forth in CCP § 704.710 et seq., but later amended his schedules to claim the home under the “declared” homestead exemption of § 704.910 et seq. The parties agree that Montgomery did record a declaration of homestead, so the law applicable to declared homesteads controls. The trustee stills seems to be arguing law applicable to automatic homesteads. Given that Montgomery vacated his home due to fear of domestic violence, the court doubts the trustee’s position would be sustained even if he had not recorded a homestead declaration. Nonetheless, the amendment to the schedules seems to leave the trustee with no coherent basis for obj