MEMORANDUM & ORDER
Appellant Kenneth P. Silverman (the “Trustee”) is Jan and Cheryl Rasmussen’s (“Debtors”) Chapter 7 Trustee. The Bankruptcy Court denied the Trustee’s motion to disallow the Debtors’ claimed homestead exemption and the Trustee appealed. For the reasons that follow, the Bankruptcy Court’s decision is AFFIRMED.
BACKGROUND
The facts underlying this appeal are straightforward and undisputed. Debtors reside at 56 Horn Lane, Levittown, New York (the “Premises”). They own a vested remainder fee interest in the Premises subject to a life estate owned by Jan Rasmussen’s mother, Jeannette. The Premises is Debtors’ principal residence; they reside there with Jeannette and pay her $600 monthly rent.
Debtors filed for Chapter 7 relief on March 27, 2009. Their remainder interest in the Premises is their only asset. Debtors claimed a homestead exemption for the Premises, and the Trustee objected.
In an opinion by United States Bankruptcy Judge Alan S. Trust, the Bankruptcy Court ruled that Debtors could claim their remainder interest as a homestead. (Bankruptcy Order dated July 20, 2010 (the “Bankruptcy Order”).) The Bank
DISCUSSION
The issue in this appeal is whether vested remaindermen who occupy real property as their principal residence and pay rent to the life tenant with whom they share a home may claim the real property as a homestead exemption under Section 5206. The Bankruptcy Court, in a case of first impression, concluded in a thoughtful and well-reasoned decision that they may. For the reasons that follow, the Bankruptcy Court’s decision is AFFIRMED.
I. Standard of Review
The Court reviews a Bankruptcy Court’s conclusion of law
de novo. See, e.g., In re Jackson,
II. Debtors may Exempt the Premises
New York’s homestead exemption statute, which applies in this case because New York has “opted out” of the exemptions listed in the federal Bankruptcy Code,
see
11 U.S.C. § 522(b); N.Y. D.C.L. § 284;
see also, e.g., In re Martinez,
(a) Exemption of homestead. Property of one of the following types, not exceeding one hundred fifty thousand dollars for the counties of Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester and Putnam; one hundred twenty-five thousand dollars for the counties of Dutchess, Albany, Columbia, Orange, Saratoga and Ulster; and seventy-five thousand dollars for the remaining counties of the state in value above liens and encumbrances, owned and occupied as a principal residence, is exempt from application to the satisfaction of a money judgment, unless the judgment was recovered wholly for the purchase price thereof:
1. a lot of land with a dwelling thereon. ...
N.Y. C.P.L.R. § 5206(a) (emphasis added). It is undisputed that Debtors occupy the Premises as their principal residence. The only issue, then, is whether Debtors “own” the Premises within the meaning of this provision. The Court concludes that they do.
In interpreting a statute, the Court begins with the statute’s words.
See Skubel v. Fuoroli,
As the Bankruptcy Court noted, a future interest is an ownership interest. Like estates in possession, future interests are descendible, alienable, and devisable. N.Y. E.P.T.L. § 6-5.1;
see also In re Kreiss,
The Trustee lodges two further protests: first, that this reading contravenes Section 5206’s “clear and unequivocal provisions and intent”; and second, that this interpretation will have impermissible consequences — situations where two homesteads (the life tenant’s and the remainderman’s) exist simultaneously on the same property. The Trustee does not offer persuasive authority for either argument, and the Court rejects both. As to the first, the Trustee points to nothing suggesting that Section 5206’s drafters “clearly and unequivocally” intended to exclude remaindermen from claiming a homestead exemption. The Court thinks the opposite is true; had New York’s legislature intended to limit the homestead exemption to those holding a fee simple absolute interest, it could have made such a limitation explicit. As to the second, the Trustee has not offered a persuasive reason why two homesteads existing on the same property would be an absurd result that ought to constrain the Court’s reading of an otherwise plain statutory text.
As the Bankruptcy Court recognized, this case presents an issue of first impression in this Circuit and, absent any controlling authority to the contrary, the Court thinks it enough to say that Debtors satisfy Section 5206’s “own and occupy” language by virtue of their vested future interest in the Premises and their occupying it as their principal residence pursuant to an oral lease. This reading of the statute is appropriate both from its plain text and in light of the principle, also noted by the Bankruptcy Court, that New York’s homestead exemption must be construed liberally in Debtors’ favor to effectuate the statute’s beneficial purpose. Cmt. to N.Y. Stat. § 291 (“[Exemption laws, though in derogation of the common law, are to be liberally construed in favor of the beneficiary in order to carry out their apparent beneficent purpose.”);
see also In re Grucza,
The Court reaches this conclusion independent of the small body of caselaw interpreting other states’ homestead provisions. Although many of these statutes are similar to New York’s, the foreign authority is conflicting and ultimately unhelpful in understanding the words of Section 5026.
Compare In re Hildebrandt,
CONCLUSION
For the foregoing reasons, the Bankruptcy Order is AFFIRMED. The Clerk of the Court is directed to mark this appeal CLOSED.
SO ORDERED.
Notes
. In a footnote to his Reply, the Trustee claims that the Bankruptcy Court was incorrect in concluding that "neither exclusive possession nor exclusive ownership are, on the face of NYCPLR Section 5206(a), required to establish an exemptible interest.” (Trustee Reply 2 n.2.) The Trustee is plainly wrong. Section 5206(a), by its terms, does not specify the circumstances of ownership or occupation required to claim a homestead exemption.