by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
HOMESTEAD; PRIORITY: When judgment lien and right to claim homestead exemption attach simultaneously, homestead right prevails.
Herndon v. Grilz, 920 P.2d 998 (Nev. 1996).
Judgment creditors executed a levy on a residence purportedly owned by the judgment debtor and leased to third parties. Thereafter, the judgment debtor re-acquired possession of the property by giving a note to the third parties in exchange for their quitclaim deed and then moved into the residence. The Nevada Supreme Court construed the so-called lease as a purchase agreement because it provided for a down payment by the lessee and an option to purchase the property at the expiration of its thirty-year term for $1. Thus, the judgment debtor had no interest in the property to which the lien could attach until he re-acquired it.
On the same day he reacquired the property, however, the judgment debtor filed a notice of homestead exemption, and subsequently filed for Chapter 7 relief, thus claiming a homestead exemption on the same day the judgment creditor's lien attached. While noting a split of authority among the states, the Court adopted the "general rule" that the homestead right prevails under such circumstances, citing Nevada's "long-standing policy of interpreting the homestead exemption liberally in favor of families."
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