An intention to subdivide does not defeat a homestead exemption in the entire parcel, at least in Massachusetts.
The owner of a home on a 13-acre property got approval to subdivide the parcel into four lots. The subdivision never took effect, however, because the owner could not satisfy the conditions imposed by the planning board.
After the owner filed under chapter 7, a creditor objected to the debtor’s claimed homestead exemption in the entire property. The bankruptcy judge sustained the objection, permitting the exemption only in one lot: the one on which the house was situated.
The First Circuit Bankruptcy Appellate Panel reversed in a Jan. 20 opinion by Bankruptcy Judge Bruce A. Harwood of Manchester, N.H.
Judge Harwood said it was error to focus on the debtor’s intention to subdivide the property. Governing Massachusetts law, he said, requires deciding whether the debtor occupied or intended to occupy the property as a principal residence.
Since the debtor in fact occupied the entire property and the subdivision had not become effective, he was entitled to exempt everything.
Even if the property were four lots and not one, the result would have been the same under state law. In Massachusetts, Judge Harwood said, the homestead would have encompassed all four parcels.
The opinion may be of limited utility in other states with differing homestead rules.