In Re Golden
This case involves the application of the California homestead exemption in a bankruptcy proceeding. The bankrupt, Golden, appeals from a $25,000 judgment in favor of the trustee, England. The issue is whеther an individual who files for bankruptcy after selling his home, and claims a homestead exemption under California law for the proceeds of that sale, is required to reinvest those proceeds in another home within six months in order to maintain the exemption. The bankruptcy court held that there was such a requirement, and because the debtor failed to invest the proceeds within six months after the sale of the house, the debtor was no longer entitled to the exemption. It granted judgment in favor of the trustee for the amount of the claimed exemption. The district court affirmed the bаnkruptcy court, and we in turn affirm the district court.
Golden sold his residence in early May, 1983 and filed his Chapter 7 petition in the bankruptcy court on June 30, 1983, less than two months later. At the time of the filing, he had approximately $25,000 remaining as unspent proceeds of the sale.
Pursuant to
.... In no case shall the homestead ... be held liable for the debts of the owner, except as provided in this title; and should the homestead be sold by the owner, the proceeds arising from such sale ... shall be exempt to the owner of the homestead for a period of six months next following such sale.
Section 1265a further provided:2
If the proceeds arising from the sale of ... a homestead are used for the purchase of real property within the period of six months following such sale, the property purchased may be selected аs a homestead in a manner provided in this title within the period of six months following such sale, and such selection ... shall have the same effect as if it had been created at the time the prior dеclaration of homestead was filed for record.
Under these sections, the proceeds of a homestead sale remain exempt for six months. Because the last day for filing objections to the claim was August 20, 1983, a date which fell within six months of the sale of the house, the trustee filed no objection. Golden, however, continued to have full control of the proceeds of this salе. He did not reinvest the proceeds in homestead property. In February 1984, the trustee demanded that Golden turn over the proceeds on the ground that they had lost their exempt status and had beсome property of the estate pursuant to
When a debtor elects to claim an exemption under state law pursuant to
Golden argues that even though he did not reinvest the proceeds within six months of the sale, the proceeds should nevertheless be exempt. He contends that a bankrupt who claims the California homestead exemption retains an exemption for the proceeds of the sale on a homestead indefinitely provided the filing of a bankruptcy petition followed within six months of the sale.
The only authority that Golden cites to support his position is a bankruptcy decision interpreting a Texas statute similar to
Other states also require reinvestment of proceeds from the sale of a homestead. For example, under Oregon law, a bankrupt loses the statutory exemption for homestead proceeds if they are not reinvested within one year from date of sale. This state reinvestment requirement has been enforced in bankruptcy proceedings. In Re Winchester, 46 B.R. 492 (Bankr.App.1984). We have previously noted that the Oregon statute is similar to the California statute, because “[b]oth require reinvestment [of proceeds] within a fixed period of time.” In Re White, 727 F.2d 884, 888 (9th Cir.1984). Similarly, under Florida lаw, a bankrupt must prove intent to reinvest homestead proceeds in order to claim an exemption for them. Orange Brevard Plumbing & Heating Co. v. La Croix, 137 So.2d 201 (Fla.1962). This requirement has been applied in bankruptcy proceedings. In Re McGuire, 37 B.R. 365, 366 (Bankr.1984).
Golden further сontends that, even if proceeds are no longer exempt, the trustee is estopped from claiming them because he did not notify the bankrupt, before the six months expired, that he intended tо make such a claim. Because the exemption remained in effect during the six-month period, and the trustee had no right to claim the proceeds during that period, we see no reason for requiring that he notify the debtor of a claim not yet in existence. Given the clarity of provisions requiring reinvestment, Golden could not have reasonably relied upon the trustee‘s silence as an indiсation of a permanent exemption.
Golden also contends that there should have been tolling of the exemption period from the time that the debtor filed his petition in bankruptcy. He relies upon In re Widdershoven, 452 F.Supp. 503 (N.D.Cal.1978), which was decided at a time when the provisions of the former bankruptcy act gave constructive possession of proceeds to the trustee until he brought his report of exemptions. Id. at 504-05. Because the debtor in that case could not have had possession and control of the proceeds until after the report was settled, the court held that the exemptiоn period was tolled from the time of the filing of the bankruptcy petition until the trustee‘s report was settled.
Under the new bankruptcy rules, however, the duty to claim exemptions is on the debtor rather than the trustee.
Finally, Golden argues that even if the proceeds are no longer exempt, he has spent some of the $25,000, and that the trustee is entitled only to judgment for the amount remaining in his possession. The award of a judgment in the amount claimed exempt at filing, however, furthers the purpose of the California exemption to preserve the proceeds of the sale for reinvestment in another home, and to prevent expenditures for nonexempt purposes. The court did not err in entering judgment in the amount of proceeds in the debtor‘s possession at the time of the filing for bankruptcy.
Affirmed.