Please note that this writer is not licensed to practice law in Oregon. This means that he is not legally permitted to give any legal advice or perform any legal services. This Bulletin and the entire contents of this website is written only for attorneys. and is not intended for the public. If any non-attorney is reading this, you must consult an attorney about ANYTHING you read here. Nothing in this website is intended to be nor should be read as being legal advice to anyone.
In re Lindquist
Oregon Bankruptcy Case No. 03-35895-rld7
October 5, 2008
In this first published opinion from the Oregon Bankruptcy Court since April, Judge Dunn held that under Oregon law the homestead exemption extends to equitable interests in residential property, enabling both spouses to claim a homestead exemption, the one who held legal title and the other who held an equitable interest, thus allowing them, in their motion to avoid a creditor's lien on their residence, to use the joint $30,000 mobile home exemption instead of the $23,000 one for an individual debtor.
Essential Facts
On the date of their joint Chapter 7 petition, wife was the sole title owner of record of the residence, a manufactured home with land, although she and her husband had lived there together for 15 years. Husband had been the sole record owner for about 12 years, but less than three months before filing the Chapter 7 case he transferred title to wife in order to try to refinance the property. (The Judge makes no issue of the short time between that transfer and the case filing.) Husband made all payments on the residence, both for the initial purchase and monthly for the mortgage., since she had no income. When he signed title over to his wife he understood that he was retaining an equitable interest in the residence.
The Judge's Analysis
Homestead exemptions are to be liberally construed, and Oregon case law has supported extensions of the homestead exemption beyond simple fee ownership, although without ever addressing this particular question. Here the residence is the actual abode of both spouses. The husband made all payments on the property. "Recognizing [husband’s] homestead exemption claim for lien avoidance purposes is consistent with the objective of O.R.S. § 18.428(1) [the and is not inconsistent with its terms." So the debtors were entitled to the $30,000 exemption of joint owners instead of the $23,000 one of a single owner.
Judge Dunn distinguished an Oregon bankruptcy court's opinion disallowing a spouse's unrecorded interest in a homestead (In re Mitchell, 9 B.R. 577 (Bankr. D. Or. 1981)) since that case turned on the Chapter 7 trustee's bona fide purchaser status under § 544(a)(3) of the Bankruptcy Code and O.R.S. § 93.640(1) to defeat the unrecorded equitable interest. But the judgment lien holder here is "neither an actual purchaser of the Property in good faith and for value protected by O.R.S. § 93.640(1) [the bona fide purchaser statute], nor a trustee entitled to hypothetical bona fide purchaser status under § 544(a)(3)."
Other Helpful Details
- Timing: This motion to avoid judgment lien was filed more than four years after the debtors had received their discharge and their Chapter 7 case had been closed. To determine the value of the residence and the amount of the senior liens and the judgment lien, the Court looked back to the date of filing the Chapter 7 case.
- State law: § 522(f)(1) of the Bankruptcy Code provides for the avoidance of a judgment lien that impairs an exemption provided for under § 522(b), and since Oregon opted out of the federal exemptions the applicable homestead exemptions are those provided for under state statute. The limits of Oregon's manufactured home exemption thus involves analysis of Oregon case law.
- The accounting: $175,000 residence value less $141,000 in senior, unavoidable liens, left a balance of $4,000 after the $30,000 homestead exemption. This means that of the nearly $11,000 judgment as of the date of the Chapter 7 case, all but $4,000 would be avoided. Interest at the Oregon judgment rate would accrue from the Chapter 7 filing date, May 27, 2003, substantially increasing the balance.
by Andrew Toth-Fejel
Bankruptcy Litigation Support for Attorneys
Andy@BLSforAttorneys.com
Please note that this writer is not licensed to practice law in Oregon. This means that he is not legally permitted to give any legal advice or provide and legal services. This Bulletin and the entire contents of this website is written only for attorneys. and is not intended for the public. If any non-attorney is reading this, you must consult an attorney about ANYTHING you read here. Nothing in this website is intended to be nor should be read as being legal advice to anyone.
© 2008 Bankruptcy Litigation Support for Attorneys
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