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13.3.9.1 General

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  3. Chapter 13 Enforcement of Judgments: General Principles, Constitutional Issues
  4. 13.3 Interpretation and Operation of Exemption Laws
  5. 13.3.9 Waiver of Exemptions
  6. 13.3.9.1 General

13.3.9.1 General

Many states prohibit waivers of personal exemptions, considering waivers to be void and against public policy.181 Courts are particularly likely to find waivers invalid when the exemptions are part of the state constitution.182 The states that do allow waiver generally require that it be in writing, signed by the appropriate parties, and acknowledged.183 Strict compliance with these requirements is necessary.184 In addition, a Federal Trade Commission (FTC) rule prohibits executory waivers of exemptions in consumer credit contracts.185

Another way that otherwise exempt property can become subject to collection remedies is if it is collateral for the debt. Most exemption statutes provide exceptions for property given as collateral in a security agreement, making collateral subject to seizure by the secured creditor.186 Likewise, the FTC prohibition on waivers of exemptions does not restrict the use of otherwise exempt property as collateral.187

Courts may also hold that exemptions do not shelter income from claims that are related to the acquisition of that income. For example, one court held that an attorney who won a retroactive child support award for a client could execute upon the award to collect his fee, even though state statutes generally exempted child support from execution.188

In some states, the debtor may also waive exemptions by failing to assert them or failing to assert them properly.189 Courts that adhere more closely to the rule that exemption statutes should be construed liberally in favor of the debtor190 do not find a waiver when a debtor does not comply strictly with procedural requirements.191

Footnotes

  • 181 See, e.g., United States v. Neff, 2007 WL 776532 (D.N.D. Mar. 12, 2007) (North Dakota forbids waiver of homestead exemption for chattel debt); Gonzalez v. Ameriquest Mortg., 2005 WL 3333259 (W.D. Tex. Dec. 8, 2005) (debtor’s statement that property not homestead insufficient to waive homestead protection when debtor owned only one residential property and lived there); Tuxis-Ohr’s Fuel, Inc. v. Trio Marketers, Inc., 2005 WL 3047266 (Conn. Super. Ct. Oct. 26, 2005) (waiver of homestead in contract—here, personal guarantee of a business debt—void as against public policy); Osborne v. Dumoulin, 55 So. 3d 577, 583 (Fla. 2011) (homestead exemption not waivable; once established, homestead can be lost only by abandonment or alienation); Chames v. DeMayo, 972 So. 2d 850 (Fla. 2007) (waiver of homestead in an unsecured agreement is unenforceable); Estate of Montague v. Nat’l Loan Inv’rs, Ltd. P’ship, 70 S.W.3d 242 (Tex. App. 2001) (invalidating debtor’s statement that land was not homestead). See also In re Crespo, 2017 WL 2437240 (Bankr. S.D. Fla. Jun. 5, 2017) (head of household wage exemption not waived by failure to claim it in state proceeding; noting that because voluntary waiver is forbidden by Florida law, it is unlikely that legislature authorized unintentional waiver). Cf. In re Morris, 2007 WL 2120177 (Bankr. N.D. Ala. July 18, 2007) (Alabama statute forbidding waiver of exemptions refers to specific exemptions provided by statute; does not exempt entire value of truck when statute caps exemption at $3000). But cf. Dominguez v. Castaneda, 163 S.W.3d 318 (Tex. App. 2005) (borrower who owned two residential properties bound by warranty that one parcel was not homestead).

  • 182 See § 13.2.5, supra.

  • 183 Chelsea State Bank v. Wagner (In re Wagner), 259 B.R. 694 (B.A.P. 8th Cir. 2001) (mortgages unenforceable for noncompliance with Iowa requirement that waiver of homestead exemption for agricultural land or buildings be in ten-point boldface type and contain prescribed language); Fix v. First State Bank of Roscoe, 359 B.R. 755 (D.S.D. 2007) (waiver void as against public policy; waivers permitted but must be “so clear that there can be no question concerning the intended effect”; not shown here where settlement agreement for unrelated matter did not mention homestead); In re Cadengo, 370 B.R. 681 (Bankr. S.D. Tex. 2007) (homestead waivers strictly limited in Texas; waiver here was ineffective); In re Hebert, 301 B.R. 19 (Bankr. N.D. Iowa 2003) (statement in personal guarantee of corporate debt that guarantors “waive the benefit of all homestead laws” not sufficient to comply with Iowa law; homestead waiver must specifically describe piece of property to which it applies); Chames v. DeMayo, 972 So. 2d 850 (Fla. 2007) (waiver of homestead requires mortgage formalities; waiver in unsecured, adhesive contract was unenforceable because against public policy); Hart v. Wachovia Bank, 159 So. 3d 244 (Fla. Dist. Ct. App. 2015) (provision in guarantee of commercial debt, which waived all exemptions, was sufficient to waive head of household wage exemption); Citizens State Bank v. Ruebel, 804 N.W.2d 314 (Iowa Ct. App. 2011) (where property included homestead and agricultural land, mortgage was void because lender failed to provide statutory notice and obtain signed waiver); Republic Leasing Corp. v. Farnes, 2000 Minn. App. LEXIS 390 (Minn. Ct. App. Apr. 25, 2000) (homestead exemption may be waived only by “an act which evidences an unequivocal intention to do so”; not shown when settlement agreement required defendants to provide “adequate security” for note but did not define adequate security); Maroun v. DeutscheBank Nat’l Tr. Co., 109 A.3d 203 (N.H. 2014) (homestead right can be waived by an act that “evidences an unequivocal intention to do so”; waiver shown when husband deeded his interest in home to wife and later filed affidavit correcting deeds’ failure to release homestead rights); Midland Funding, L.L.C. v. Giambanco, 28 A.3d 831 (N.J. Super. Ct. App. Div. 2011) (waiver of right to notice of wage garnishment not against public policy if knowing and voluntary; not shown here where consent judgment does not make clear to debtor what rights are being given up); Red River State Bank v. Reierson, 533 N.W.2d 683 (N.D. 1995) (waiver of homestead rights invalid when it was no more conspicuous than rest of mortgage). See also In re Estate of Darby v. Stinson, 68 So. 3d 702 (Miss. Ct. App. 2011) (Mississippi law provides that exempt property, including homestead, passes to spouse, children, or grandchildren free of debts of deceased; Medicaid contract that allowed claim against estate not a waiver of statutory homestead because it did not make clear that recipient was waiving homestead). Cf. USAmeriBank v. Klepal, 100 So. 3d 56 (Fla. Dist. Ct. App. 2011) (paragraph in promissory note consenting to writ of continuing garnishment and attachment against disposable earnings to satisfy any judgment in favor of lender was sufficient to waive statutory head of family wages exemption).

  • 184 Red River State Bank v. Reierson, 533 N.W.2d 683 (N.D. 1995).

  • 185 16 C.F.R. § 444.2(a)(2). See § 13.3.9.2, infra.

  • 186 See § 15.2.7, infra.

  • 187 See § 13.3.9.2, infra.

  • 188 In re Wageman, 968 P.2d 1114 (Kan. Ct. App. 1998). Cf. Christensen Law Office, P.L.L.C. v. Olean, 916 N.W.2d 876 (Minn. Ct. App. 2018) (per statute, attorney’s lien will attach to homestead only if it is involved in or affected by a proceeding in which the attorney is involved and the client waives the exemption; inapplicable here because of lack of waiver). But see Binder & Binder, Prof’l Corp. v. Barnhart, 281 F. Supp. 2d 574 (E.D.N.Y. 2003) (anti-alienation clause of Social Security Act prevents attachment of attorney’s charging lien to SSI benefits recovered in proceeding in which attorney represented claimant), vacated on other grounds, 399 F.3d 128 (2d Cir. 2005) (jurisdictional grounds). But cf. Quiroga v. Citizens Prop. Ins. Corp., 34 So. 3d 101 (Fla. Dist. Ct. App. 2010) (Florida homestead waiver requires mortgage formalities, so contingent fee agreement with attorney who sued insurer to obtain payment for hurricane damage not sufficient to waive exemption in the proceeds).

  • 189 See generally § 13.3.4, supra (procedure for claiming exemptions); § 13.5.7, infra (whether federal exemption can be waived by failure to follow state procedure).

  • 190 See § 13.3.1, supra.

  • 191 In re Mootosammy, 387 B.R. 291 (Bankr. M.D. Fla. 2008) (exemptions not waived by failure to follow Florida procedure for claiming exemptions within fifteen days after levy); In re Skinner, 2001 WL 1699660 (Bankr. M.D.N.C. Aug. 7, 2001) (minor procedural omission by debtor is not permanent waiver of exemptions). See also Household Fin. Corp. v. Ellis, 419 S.E.2d 592 (N.C. Ct. App. 1992) (waiver of exemptions by failing to assert them at time of first execution does not prevent debtor from asserting them against subsequent executions; statutory requirement that constitutional exemption be asserted prior to payment of proceeds of sale to creditor is unconstitutional), aff’d, 429 S.E.2d 716 (N.C. 1993) (per curiam). See generally § 14.5.4.1, infra.