Memorandum of Decision Re: Avoidance of Judicial Lien

FOR THE NORTHERN DISTRICT OF CALIFORNIA In re MARVIN HEINSOHN,                                       No. 92-1003      Debtor. ___________________________/
Memorandum of Decision
     In one form or another, California has had a dual homestead exemption scheme for many years. The state has provided for both a formal, declared homestead and an informal, "automatic" homestead. The principal difference between the two is that judgment liens do not attach to formally homesteaded property but do attach to property exempt under the automatic homestead provisions, so that if property is voluntarily sold without a formal declaration of homestead judgment liens must be paid.      Periodically, a judgment creditor or a trustee has convinced a bankruptcy court that an automatic homestead does not afford full protection to the homeowner in bankruptcy. See, e.g., In re Martin, 6 B.R. 827 (Bankr.C.D.Cal.1980); In re Knudsen, 80 B.R. 193 (Bankr.C.D.Cal.1987). While these cases create a great stir at first, they are uniformly reversed on appeal or overruled. See In re Herman, 120 B.R. 127 (9th Cir.BAP 1990); In re Weiman, 22 B.R. 49 (9th Cir.BAP 1982); In re Sanford, 8 B.R. 761 (N.D.Cal.1981).      In this case, judgment lien creditor Kathleen Heinson asks the court to follow the bankruptcy court decision in In re Knudsen and declare that her lien is unavoidable because the debtor did not record a formal declaration of homestead before filing his bankruptcy petition. However, in order to do so the court would have to disregard the Appellate Panel decision in In re Herman. In that case, the court held that a judicial lien may be avoided even if the home was declared exempt under the automatic homestead provisions of California law, effectively overruling Knudsen. Even if the appellate case was not binding, this court would still follow it as being better reasoned.      At the hearing on this matter, Kathleen Heinson abandoned her arguments regarding the validity of the homestead and objected to avoidance of her lien only on the issue of law discussed above. The court having resolved that issue against her, her objection will be overruled and the debtor's motion to avoid her judicial lien will be granted. Counsel for the debtor shall submit an appropriate form of order.
Dated: September 7, 1992                                                                              _______________________                                                                                                                      Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy