A member of the military may be able to claim a homestead exemption in a state where he or she does not reside, according to the Ninth Circuit Bankruptcy Appellate Panel. The principle does not apply only to service members.
Were it otherwise, many service members would be bereft of the ability to exempt a homestead.
A couple filed a chapter 7 petition in Nevada. The wife had purchased a home in Washington State in 2003 and listed it as her separate property. Her husband had been in the Navy for more than 25 years. The family had lived in Guam until 2017, when he was stationed in Nevada.
The couple claimed the Washington home as exempt under Nevada law. Their drivers’ licenses listed Washington as their addresses. The husband listed Washington as his residence on his earnings statements. They paid real estate taxes in Washington under the state’s homestead law and stated that they intended to return to Washington on the husband’s retirement from the Navy in June 2020.
The trustee objected to the homestead exemption, contending that Nevada law does not permit a homestead exemption for property in another state. The bankruptcy judge overruled the objection.
In the BAP’s nonprecedential, per curiam opinion on November 3, the couple saved their home, albeit in a convoluted manner.
The parties fought over Nevada law and whether the state’s exemptions allow protection of property in another state. The Nevada Supreme Court had allowed an exemption in property where the debtor did not reside. However, the Nevada court had not decided whether the state’s exemption could be applied to out-of-state real property.
The BAP wasn’t required to decide what would have been a question of first impression under Nevada law. As the BAP explained, Section 522(d) allows a debtor to claim “exemptions available [under] the law of the state in which the debtor is domiciled.” The BAP went on to explain the difference between a person’s residence and domicile.
The BAP said that residence and domicile are “not necessarily the same: a person can reside in a place that is not the person’s domicile.” Why? Because domicile means actual residence coupled with a present intention to stay there, the BAP said, citing authority.
The BAP explained that debtors can file petitions in states whose exemptions they are not entitled to claim. Why? Because a debtor can file where the debtor resides, is domiciled, or has a principal place of business under 28 U.S.C. § 1408. “But,” the BAP said, “a debtor can claim exemptions only under the law of the debtor’s domiciliary state.”
Turning to the case on appeal, the BAP said that the debtors were domiciled in Washington, not in Nevada, because they “regarded the Washington Property as their permanent home” and intended to return there. The BAP said that the trustee “offered no contrary evidence.”
The BAP therefore ruled that the debtors were not entitled to claim Nevada exemptions because they were not “domiciled” in that state. Still, they were entitled to protect the Washington property, the BAP said.
The BAP gave the debtors leave to amend their schedule of exemptions and claim a homestead exemption under Washington law, the state in which they were domiciled. The BAP allowed the trustee leave to object “to that new claim on any appropriate ground.”
The BAP panel consisted of Bankruptcy Judges Robert J. Faris, Julia W. Brand and Scott H. Gan.
A member of the military may be able to claim a homestead exemption in a state where he or she does not reside, according to the Ninth Circuit Bankruptcy Appellate Panel. The principle does not apply only to service members.
Were it otherwise, many service members would be bereft of the ability to exempt a homestead.
A couple filed a chapter 7 petition in Nevada. The wife had purchased a home in Washington State in 2003 and listed it as her separate property. Her husband had been in the Navy for more than 25 years. The family had lived in Guam until 2017, when he was stationed in Nevada.
The couple claimed the Washington home as exempt under Nevada law. Their drivers’ licenses listed Washington as their addresses. The husband listed Washington as his residence on his earnings statements. They paid real estate taxes in Washington under the state’s homestead law and stated that they intended to return to Washington on the husband’s retirement from the Navy in June 2020.
The trustee objected to the homestead exemption, contending that Nevada law does not permit a homestead exemption for property in another state. The bankruptcy judge overruled the objection.
In the BAP’s nonprecedential, per curiam opinion on November 3, the couple saved their home, albeit in a convoluted manner.