Daily Development for Thursday, February 18, 2010
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri

Here are two little bankruptcy homestead decisions in Kansas.  Note that Kansas is one of a handful of states (I believe Texas, Florida and possibly Minnesota are others) that permit homestead exemption without limitation as to value, although within a city the area is limited to one acre is size.   It has elected for state law treatment of homestead claims. Thus these cases have some consequence to the parties.  Debtors won in both cases.

BANKRUPTCY; HOMESTEAD: Where husband and wife have separate residences, they may claim their own residence as a homestead, or the residence of the spouse as a homestead (should they have an interest in it) but not both. 

In re Hall 2009 Westlaw 4456542 (10th Cir. BAP 12/4/09)

Husband and wife were separated, and husband had moved out of the family residence and moved into a mobile home on the same property.  Apparently they jointly owned the property. Both parties declared a Chapter 7 bankruptcy, and the trustee objected to the inclusion of both the house and the mobile home as homestead property.

A homestead may be claimed in property on which the Debtor lives or on which a member of Debtor’s family lives.  But the court noted that the statute provides for claiming of a “homestead,” not homesteads.  So neither husband nor wife could claim two homesteads.

The trial court found that the husband indeed had abandoned the house and had established a residence in the mobile home, but still had a one half interest in the house  where his family lived. Under these circumstances, the court held that the husband could claim the mobile home as his homestead, or could claim a homestead in his one half interest in the family home, but not both.

Since the wife had only a one half interest in the family house, she could claim a homestead in only a one half interest in that property.  Because her husband lived in the mobile home, she could also elect to claim the mobile home as the homestead. 

Since the mobile home consisted of a 1973 Bell mobile home with no tongue and no wheels and a value of around $3000, it is likely the parties will elect the house. 

Comment 1: Note that Kansas does not have “judgment proof” tenancy by the entireties. 

Comment 2: There may be some confusion as to whether the wife or the husband could individually elect to invoke homestead in property as to which they own only a one half interest.  The court seems to say at one point that the husband can invoke a homestead as to a one half interest in the family house.  But at other points it simply states that he has the option to exempt “the motor home” (on property, at least, that is half owned by the wife) and that the wife has the option to exempt “the house,” despite the fact that she only owns half.  Since the ambiguity rests with the opinion, and since bankruptcy mavens undoubtedly will clear this up for us, I pass on the confusion.

BANKRUPTCY; HOMESTEAD:   Even though debtors may reside in another house more than half the time each year, they can continue to claim their original home as an exempt homestead if it remains empty but maintained while they are not there and they have a clear intent to return to it.  In re Curry, 2009 Westlaw 5198294 (D. Ka. 12/22/10)

Debtors resided from time to time during the year in one of two properties, located 120 miles apart.  There was a “country home,” wife’s family home, which was not rented, connected to utilities, and where they spent some of their time.  There was the “city apartment,” where Husband, at least, spent eight months a year for his work as a school bus driver.  Wife’s presence in the country home was uncertain, but she apparently spent quite a bit of time in the city apartment.

Both debtors have extensive activities in the City, where they vote, attend church, receive medical care, bank, insure and license their vehicles and receive mail.  But both Debtors claim that they view the country home as their residence, despite their temporary sojourn in the City, and intend to return there full time.

The court, compiling a long list of case summaries which would be useful to any Kansas lawyer, at least, concluded that the parties in fact never intended to abandon their country home, though circumstances might have compelled a temporary absence.  Since no one else lived there in the meantime, it remained their homestead. 

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