MEMORANDUM DECISION ON DEBTORS’ MOTION TO REOPEN CASE AND AVOID JUDICIAL LIEN
The Debtors have filed a motion to reopen their case and avoid a judicial lien encumbering their former residence. Judgment lienholder Summer Hills Plaza (“SHP”) opposes the motion. After entertaining oral argument at the hearing the court took the matter under submission.
The following facts are not in dispute. In July of 1987, the Dеbtors recorded a “Declaration of Homestead” in the official records of Sacramento County for their house at 6025 McMahon Drive, Sacramento, California. In January of 1988 SHP obtained two default judgments, one against each Debtor, in the Sacramento Superior Court. SHP recorded two abstraсts of judgment for $45,334.36 1 , one in respect to each judgment, with the Sacramento County Recorder in January of 1988. On May 31, 1988, the Debtors filed their voluntary chapter 7 petition. On their schedules of assets and liabilities, the Debtors listed their house at 6025 McMahon Dr., Sacramento, and alleged that its fair market value was $55,000. The Debtors did nоt schedule any debts secured by their house on schedule A-2, nor did they schedule SHP as a creditor, although its attorneys, Walker and Crawford, were listed as the holder of an unsecured claim of $48,000 on schedule A-3. On schedule B-4, they claimed a homestead exemption of $45,000.
The Debtors have not filed any amendments to their schedules. However, no creditor or interested party objected to their claim of homestead exemption. The court granted the Debtors their discharge on October 17, 1988, and the bankruptcy case was closed on November 7, 1988.
The Debtors sold their house in 1991. They obtained a preliminary title report on the property dated March 20, 1991. That-report contained 9 exceptions (encumbrances), the last one of which was for SHP’s abstracts of judgment. The 8th exception was for a deed of trust, the last assignment of which was recorded on July 14, 1986 2 . For some unknown reason, the *605 Debtors proceeded to sell the property before аttempting to avoid SHP’s judgment liens. In order to close escrow, then, they had to negotiate with SHP. SHP agreed to release its liens against the house provided that the net proceeds of the sale were deposited into the client trust account maintained by the Debtors’ attorney, and provided further that no disbursements could be made therefrom without SHP’s consent or order of this court.
Escrow for the sale of the house closed May 31, 1991. Upon the request of the court, the Debtors provided a copy of the escrow holder’s closing statement, which revealed, inter alia, that the house had been sold for $85,000, that Firemаn’s Fund had been paid $43,861.47 in principal and $760.92 in interest 3 , and that the net proceeds due to the Debtors-sellers was $31,-084.88. The problem now before the court is to determine the respective rights of SHP and the Debtors to those proceeds.
SHP objects to the Debtors’ motion to reopen their case. The Bankruptcy Code empowers the bankruptcy court to reopen a case to “accord relief to a debtor”. 11 U.S.C. § 350(b). The court’s power is not circumscribed by any time limit. As this court has previously suggested, such motions should be routinely granted because the case is necessarily reopened to consider the underlying request for relief.
In re Corgiat
SHP next disputes the validity of the Debtors’ claim to a homestead exemption. Although the time for objecting to exemptions has long since passed
4
, the Debtors’ motion to avoid SHP’s lien necessarily raises the issue of whether the liened property is exempt for lien avoidancе purposes.
In re Montgomery,
However, SHP did not object to the Debtors’ contentions that (1) аlthough Betty Dodge started working in Salinas, California in March of 1987 and continued to do so until well after the bankruptcy petition was filed, she only stayed there four days a week in a rented one bedroom apartment while working 10 hour shifts and returned to the McMahon Drive house in Sacramento on the weekends, and that (2) during thе same time period Robert usually stayed in Sacramento at McMahon Drive, except for occasional trips to Salinas to stay with Betty. Debtors do not dispute that in early 1989 they rented a two bedroom apartment in Salinas and moved there so that Betty could spend more time with Robert, who suffered from еmphysema.
*606 The California homestead statutes are set forth in Part 2 (Civil Actions), Title 9 (Enforcement of Judgments), Division 2 (Enforcement of Money Judgments), Chapter 4 (Exemptions) of the California Code of Civil Procedure. Chapter 4 is comprised of five Articles. Article 4 (Homestead Exemption), commencing with § 704.710, sets forth debtors’ rights under thе basic exemption (sometimes referred to the “undeclared” or “automatic” exemption). Article 5 (Declared Homesteads), commencing with § 704.910, sets forth the additional rights of those debtors who qualify and choose to record a Declaration of Homestead on their residence.
The basic hоmestead protects the debtor and the debtor’s family from the sale of their dwelling to enforce a money judgment except pursuant to a court order. § 704.740(a). Even if the levying creditor is able to obtain a court order of sale, the property cannot be sold unless a bid is received that exceeds the total of (1) all liens and encumbrances on the property and (2) the amount of the court determined homestead. § 704.800(a). Finally, if the homestead is sold, or is damaged or destroyed or is acquired for public use, the homestead proceeds are exempt for a period of six months from actual receipt to permit the debtor to reinvest them in a new homestеad. § 704.720(b).
Those debtors fortunate enough to own “any interest in real property” that is also a “dwelling” may choose the additional benefits of a declared homestead under Article 5 of the homestead statutes. § 704.-910(c). However, § 704.970 subjects Article 5 declared homesteads to levy and execution just like the Article 4 basic homesteads and with only the same rights and benefits as provided in Article 4. In order to prove the right to an exemption under either Article 4 or Article 5 in the court proceedings following the levy, a debtor must show that his or her residence is a “homestead” as defined in C.C.P. § 704.-710(c).
In re Anderson,
§ 704.710(c) breaks down its definition of “homestеad” into two parts; an unsold dwelling and a dwelling obtained with the exempt proceeds from a previously taken homestead. The first definition is set forth in the first sentence of the section, and reads as follows:
“Homestead” means the principal dwelling (1) in which the judgment debtor or the judgment debtor’s spouse resided on thе date the judgment creditor’s lien attached to the dwelling, and (2) in which the judgment debtor or the judgment debtor’s spouse resided continuously thereafter until the date of the court’s determination that the dwelling is a homestead. (Emphasis added).
While the lien created by the recordation of an abstract of judgment will not attаch to a declared homestead unless the value of the homesteaded property exceeds the total of all liens and encumbrances and the amount of the homestead exemption because of § 704.950, there is no prohibition against the attachment of an execution lien. An execution lien is created when property is levied upon under a writ of execution. § 697.710. What this means in the context of a bankruptcy proceeding, where the filing of the petition is tantamount to a levy on the debtor’s property, is that the debtor or the debtor’s spouse must reside in the dwelling when the petition is filed to be entitled to a homestead exemption whether the homestead is claimed under either Article 4 or Article 5. Since it was stipulated in Anderson that the debtors did not reside on the property when their bankruptcy petition was filed, their homestead exemption claim had to be denied 6 .
*607 In the present case, the issue of residency is disputed. The Debtors’ lifestyle was the same from March of 1987 until after their petition was filed. In this case, then, the answer to the question of whether the Debtors resided on McMahon Drive under the homestead definition would be the same at all relevant points of time; when they recorded their Declaration of Homestead, when SHP recorded its abstracts of judgment or when their bankruptcy was filed. The answer would also be the same at the time they filed their bankruptcy whether or not they had a valid declared homestead.
The essential factors in determining residency for homestead purposes are physical occupancy of the property and the intent to live there.
Ellsworth v. Marshall,
The amount that a debtor may claim exempt is governed by § 704.730. When the Debtors filed their рetition in 1988 that section provided in relevant part:
(a) The amount of the homestead exemption is one of the following:
(1) Thirty thousand dollars ($30,000) unless the judgment debtor ... is a person described in paragraph (2) ...
(2) Forty-five thousand dollars ($45,-000) if the judgment debtor or spouse of the judgment debtor who resides in the homestead is at the time of the attempted sale of the homestead a member of a family unit ...
“Family unit” was defined in § 704.-710(b)(1) to mean a debtor and his spouse, if they reside together in the homestead property. The evidence of record is that the Debtors were married and, except for temporary absences, resided together in their home at the time this bankruptcy case was filed. Hence, they were eligible to claim a maximum exemption of $45,000.
The Debtors’ eligibility to claim a homestead exemption and their ability to avoid a judicial lien are fixed as of the petition date.
White v. Stump,
No time limit is prescribed in the Bankruptcy Code or the Federal Rules of Bankruptcy Procedure for a debtor to bring a motion under 11 U.S.C. § 522(f)(1) to avoid a judicial lien that impairs an exemption. A debtor’s delay in filing an avoidance motion is not in аnd of itself prejudicial, and absent actual prejudice, the motion can be brought at any time.
In re
*608
Yazzie,
The foregoing shall constitute the court’s findings of fact and conclusions of law.
An appropriate order will issue.
ORDER GRANTING DEBTORS’ MOTION TO REOPEN CASE AND AVOID JUDICIAL LIEN
The court having issued its Memorandum Decision, and good cause appearing;
IT IS HEREBY ORDERED that the judicial liens in favor of Summer Hills Plaza, which are evidenced by the abstracts of judgment recorded with the Sacramento County Recorder on January 13, 1988, documents #008263 and 008264, are avoided in respect to the proceeds from the sale of the real property more commonly known as 6025 McMahon Drive, Sacramento, California, and shall not attach to any property subsequently acquired by the above-named Debtors.
IT IS FURTHER ORDERED that Debtors’ counsel shall pay the sum of $1,000.00 to Summer Hills Plaza from the sales proceeds held in his trust account as a condition precedent to the avoidance of the Summer Hills Plaza’s judicial liеns.
Notes
. Each abstract was in the amount of $45,-334.36. It is not clear why two judgments were obtained. One judgment against both Debtors on joint and several liability would seem to be more appropriate, since the total damages were only |45,334.36 and not twice that amount.
. This obligation should have been listed on the Debtors' A-2 schedule in thе bankruptcy. Page 3 of the report, listing exceptions 3 through 7, inclusive, and the first part of exception 8, was missing from the copy attached to Mrs. Dodge’s declaration of November 13, 1991, so the court *605 was unable to determine the name of the lender or the amount of the loan.
. This apparently was the оbligation the Debtors failed to list on their schedule A-2.
. Federal Rule of Bankruptcy Procedure 4003(b), in effect, limits the filing of objections to exemption claims to within 30 days after the conclusion of the first meeting of creditors, or 30 days after an amendment to the list of exemptions.
.All subsequent statutory references are to the California Code of Civil Procedure (West, 1987) unless otherwise noted.
. One issue the Anderson case did not address was the nature of the benefit of the provision in § 704.950(a) that judgment liens do not attach to declared homesteads. One possible benefit is that debtors need not reside on the homesteaded premises on or after the date a judgment creditor creates a judgment lien by recording an abstract or certified copy of the judgment, because the judgment lien does not attach until the equity in the property exceeds all liens, encumbrances and the homestead amount. Thus, as long as there is insufficient equity and provided that no creditor levies under a writ of attachment or execution, the declared homestead is safe until the debtors once again reside on the homesteaded premises.