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15.2.2.1 Dollar Amounts or Acreage Protected

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  3. Chapter 15 Protecting the Debtor’s Home, Tangible Personal Property, and Other Assets
  4. 15.2 Homestead Exemptions
  5. 15.2.2 What Homesteads Are Protected?
  6. 15.2.2.1 Dollar Amounts or Acreage Protected

15.2.2.1 Dollar Amounts or Acreage Protected

The amount of the homestead exemption varies significantly from state to state. For example, Michigan allows $30003 and Nevada allows up to $605,000.4 Florida does not set a dollar amount but allows up to 160 acres outside a municipal area and a half acre within a municipal area.5 Some states provide a larger homestead exemption for older or disabled persons.6 Tennessee provides an enhanced exemption for persons having legal custody of a minor child.7 When a statute caps the value of an exempt parcel of land, but not its acreage, there is no limit on the size of the parcel.8

The dollar amount of the homestead exemption generally refers to the debtor’s equity in the property. For example, if a $200,000 property is encumbered by a $190,000 mortgage, then a $10,000 homestead exemption will make it completely exempt.9 A Texas decision holds that a debtor can use the homestead exemption even if the debt on the home exceeds its value—that is, even if the debtor has no equity in the home.10 California’s automatic homestead exemption, which applies to any home, broadly defined, occupied by the debtor or certain family members, bars a forced sale, unless a court finds that the proposed sale will bring in more than the amount of existing encumbrances plus the homestead exemption amount.11 (Unlike the declared homestead,12 it permits the attachment of a lien, which may be foreclosed by forced sale if the equity in the property exceeds the homestead amount, or the property ceases to be occupied as a homestead).

If the area or value of the homestead exceeds the statutory cap, the court may divide the land into exempt and non-exempt parcels.13 If division is not feasible—for example, a quarter acre homestead in a suburb with one acre zoning—the homestead may be sold and the debtor will receive the exempt amount.14

Footnotes

  • 3 Mich. Comp. Laws § 600.6023(1)(g).

  • 4 Nev. Rev. Stat. § 115.010(2).

  • 5 Braswell v. Braswell, 890 So. 2d 379 (Fla. Dist. Ct. App. 2004) (discussing method of calculating half acre, here considering rights in common areas of condo complex).

  • 6 See, e.g., In re Bush, 346 B.R. 207 (Bankr. S.D. Cal. 2006) (explaining method of calculating income, for California statute granting enhanced homestead exemption to low-income debtors age 55 and older: sole proprietor of small business may deduct cost of goods and any legitimate business expenses but not “investment losses”); In re Sweitzer, 332 B.R. 614 (Bankr. C.D. Cal. 2005) (investment losses may be deducted in calculating gross income to determine eligibility for enhanced homestead exemption available to debtors age fifty-five or over with gross annual income below $15,000); In re Rolland, 317 B.R. 402 (Bankr. C.D. Cal. 2004) (debtors not entitled to increased exemption for “physically or mentally disabled,” when wife, although diagnosed with depression, claimed monthly income from self-employment and monthly expense for self-employment tax); In re LaHaye, 2003 WL 22764771 (Bankr. N.D. Cal. Sept. 10, 2003) (standard for disability same as for Social Security disability; burden of proof on objector; when evidence inconclusive, enhanced exemption allowed); Tarlesson v. Broadway Foreclosure Invs., L.L.C., 109 Cal. Rptr. 3d 319 (Cal. Ct. App. 2010) (debtor who swore she was over fifty-five, unmarried, and had an income less than $15,000 was entitled to enhanced $150,000 homestead; burden was on creditor to show she was not entitled); Shamban v. Masidlover, 705 N.E.2d 1136 (Mass. 1999) (disabled person who filed declaration of homestead claiming $200,000 exemption, but failed to include statutorily required evidence of disability, could claim only standard $100,000 exemption); In re Davis, 681 N.W.2d 452 (S.D. 2004) (increased homestead for the elderly permissible, but unlimited exemption violates state constitutional requirement of reasonableness). But cf. In re Lopez, 2015 WL 5309580 (B.A.P. 9th Cir. Sept. 3, 2015) (receipt of workers’ compensation, which may be awarded for temporary or partial disability, not sufficient to support California exemption); In re Collet, 351 B.R. 395 (Bankr. W.D. La. 2006) (Louisiana’s enhanced homestead exemption for debts “arising directly” from “catastrophic or terminal illness or injury” did not apply when part of borrowed money used for family living expenses while debtor recovered from surgery).

  • 7 In re Bush, 593 B.R. 600 (Bankr. M.D. Tenn. 2018) (Tennessee’s increased exemption for a person having custody of a minor child applies to debtor who held co-guardianship with his wife over his minor grandchild—who lived with them—and for whom they provided all necessities); In re Allman, 2011 WL 4053129 (Bankr. E.D. Tenn. Sept. 12, 2011) (in case of non-parent, court order must be shown; couple who cared for minor child of their incarcerated daughter, pursuant to revocable power of attorney, not entitled to exemption).

  • 8 In re Gregory, 229 B.R. 168 (Bankr. N.D. Ohio 1999).

  • 9 See, e.g., KLC, Inc. v. Trayner, 426 F.3d 172 (2d Cir. 2005) (Conn. law) (after payment of consensual and statutory liens, but not judgment liens, debtor entitled to foreclosure sale proceeds up to amount of exemption); In re Cox, 315 B.R. 850, 858 (B.A.P. 8th Cir. 2004) (Iowa law) (homestead exemption applies to equity in the residence—that is, value of home minus amount of consensual liens); Kipp v. Sweno, 629 N.W.2d 468 (Minn. Ct. App. 2001) (remanding to determine if equity exceeded cap); Baumann v. Chaska Bldg. Ctr., Inc., 621 N.W.2d 795 (Minn. Ct. App. 2001) (cap on homestead exemption applies to owner’s equity, not fair market value); State ex rel. Koster v. Quick, 332 S.W.3d 199 (Mo. Ct. App. 2010) (homestead amount in Missouri Incarceration Reimbursement Act refers to debtor’s equity in property); Miller Constr. Co. v. Coltran, 43 P.3d 67 (Wash. Ct. App. 2002) (in determining whether equity is available to satisfy judgment lien, only liens senior to the judgment lien may be considered). See also In re Watts, 298 F.3d 1077 (9th Cir. 2002) (Cal. law) (creditor may file lien on property in which debtor has no non-exempt equity and may execute once equity is created by appreciation of home and pay down of mortgage); In re Anderson, 378 B.R. 296 (Bankr. W.D. Wash. 2007) (judgment lien can attach to homestead only if there is equity in excess of homestead amount); In re DeLavern, 337 B.R. 239 (Bankr. W.D. Wash. 2005) (filing a judgment creates lien on value of homestead in excess of exemption; when debtors’ equity was less than exemption amount, judgment creditor was unsecured); Martone-Rosato v. Guardiano-Neizwanger, 2001 Conn. Super. LEXIS 1294 (Conn. Super. Ct. Apr. 11, 2001) (lien may be placed against property if owner’s equity exceeds statutory exemption), aff’d, 802 A.2d 927 (table) (Conn. App. Ct. 2002); In re Contrevo, 153 P.3d 652 (Nev. 2007) (judgment lien cannot attach to fully exempt property).

  • 10 In re Parsons, 530 B.R. 411 (Bankr. W.D. Tex. 2014) (Texas debtors may claim homestead for property in which, on petition date, they had no equity; Texas statute protects property itself, not debtors’ “interest”).

  • 11 Cal. Civ. Proc. Code §§ 704.710–704.850 (West). See Fidelity Nat’l Title Ins. v. Schroeder, 179 Cal. App. 4th 834 (Cal. Ct. App. 2009) (creditor could not show injury in fact, a prerequisite for setting aside a fraudulent transfer, when prior encumbrances plus homestead exemption exceeded the value of the transferred property).

  • 12 Cal. Civ. Proc. Code §§ 704.910–704.995 (West).

  • 13 In re Bradley, 294 B.R. 64 (B.A.P. 8th Cir. 2003) (Ark. law) (allowing debtors to select which quarter acre was homestead, the value of which would be paid to them out of proceeds); In re Wait, 2009 WL 3151184 (Bankr. N.D. Iowa Sept. 1, 2009) (choosing between debtor’s and trustee’s proposals for division; allowing debtor to keep house and certain out-buildings, leaving two square parcels for sale). See also In re Hartley, 483 B.R. 700 (Bankr. W.D. Wis. 2012) (large parcel could be divided into homestead and non-homestead parcels).

  • 14 Siewak v. AmSouth Bank, 2007 WL 141186 (M.D. Fla. Jan. 16, 2007) (fact issue whether property could be divided, or must be sold and proceeds apportioned); In re Quraeshi, 289 B.R. 240 (S.D. Fla. 2002) (when half acre was 19% of total acreage, debtor allowed to exempt 19% of net proceeds of sale); In re Bradley, 301 B.R. 546 (Bankr. W.D. Ark. 2003) (formula for allocating sales proceeds if zoning or subdivision covenant prevents division). See also In re McCabe, 299 B.R. 564 (Bankr. N.D. Iowa 2003) (no “equitable exception” to Iowa’s half acre limit for urban homestead; partition will result in parcels of low value); Jackson v. Halls, 314 P.3d 1065 (Utah Ct. App. 2013) (after sale debtor must receive homestead amount in cash, not as credit against judgment; other interpretation would nullify provision making proceeds exempt for one year). But cf. In re Weathers, 423 B.R. 530 (Bankr. W.D. Ark. 2009) (when home located on 0.3 acre parcel, which could not be subdivided, debtors allowed to keep their home and buy back the 0.05 acres by which the lot exceeded the 0.25 acre limit, at a price calculated by the court).