OPINION
Jаmes Mark Wengerd and Cheryl Sue Wengerd (“Debtors”) appeal an order of the bankruptcy court sustaining the Trustee’s objection to their homestead exemption and granting the Trustee’s motion for turnover of proceeds from the sale of the Debtors’ residence.
I.ISSUE ON APPEAL
The issue raised by this appeal is whether the bankruptcy court erred in sustaining the Trustee’s objection to the Debtors’ homestead exemption and granting the Trustee’s motion for turnover of рroceeds from the sale of the Debtors’ residence.
II.JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction to decide this appeal. The United States District Court for the Northern District of Ohio has authorized appeals to the Panel, and neither party timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). An order on an objection to a debtor’s claim of exemрtion is final for purposes of appeal.
See Menninger v. Schramm (In re Schramm),
The bankruptcy court’s conclusions of law are reviewed
de novo. Darrohn v. Hildebrand (In re Darrohn),
III.FACTS
On July 3, 2009, James Mark Wengerd and Cheryl Sue Wengerd (“Debtors”) filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code. At that time, the Debtors resided at 14654 Du-quette Ave., N.E., Hartville, Ohio 44632 in a home thаt they had owned since March 14, 1995. The fair market value of the home was listed on Schedule A as $205,000.00 with secured debt of $164,978.92. Pursuant to Ohio Revised Code § 2329.66(A)(1), the Debtors claimed
On May 27, 2009, prior to filing their petition for relief, the Debtors entered into a contract to sell their home for $205,000. They did not disclose the pending sale of their home in their petition, nor did they list the contract to sell on Schedule E, which requires the listing of executory contracts. On their Chapter 7 Individual Debtor’s Statement of Intention, they stated that they intended to retain the property. However, James Wengerd testified at deposition that, assuming all went according to plan with the sale of their home, at the time they filed their petition for relief they intended to move to another residence.
On July 7, 2009, four days after they filed their petition, the sale of the home closed. With the proceeds of the sale, the Debtors paid their first and second mortgages. They received the remaining sum of $34,874.47 on July 8, 2009. At the meeting of creditors, the Debtors testified that they were in possession of the cash from the sale of their home and were using a portion of it for living expenses.
On July 9, 2009, the Debtors executed a contract to move to an apartment in Hes-ston, Kansas where James Wengerd was enrolled in divinity school. On July 15, 2009, the Debtors arrived and moved into their apartment in Hesston, Kansas. They did not use the funds they received from the sale of their home in Ohio to purchase another home, nor do they intend to do so.
On October 19, 2009, the chapter 7 trustee, Lisa M. Barbacci (the “Trustee”), filed an Objection to Homestead Exemption and Motion for Turnover of Property in which she moved for an order for turnover of the proceeds from the sale of the residence. The Trustee argued that the Debtors could not claim a homestead exemption because they did not intend to rеside at the Ohio home post-petition.
Following a status conference at which the parties agreed to submit briefs and allow the court to decide the matter without oral argument, the bankruptcy court issued an opinion and order sustaining the Trustee’s objection to the Debtors’ homestead exemption and granting the Trustee’s motion to turn over the proceeds from the sale of the Debtors’ home. The court found that a “debtor cannot claim a homestead exemption if, through his pre-petition behavior, he shows a clear intent to abandon the property immediately post-petition.” (Bankr.Ct. Docket # 76, Memorandum of Opinion, Oct. 14, 2010, at 3.) Based upon this finding, the court then held that these Debtors could not claim a homestead exemption because they had shown a clear intent to abandon their Ohio home by entering into a sales contract pre-petition and ultimately selling the property three days after filing their petition for relief.
The Debtors’ timely appeal followed.
IV. DISCUSSION
The Debtors’ bankruptcy estate consists of all of their legal and equitable interests in all property.
See
11 U.S.C. § 541(a)(1). The Bankruptcy Code permits the Debtors to exempt certain enumerated property from the estate.
See
11 U.S.C. § 522. Pursuant to 11 U.S.C. § 522(b), Ohio has elected to opt out of the federal exemptions and create its own exemptions.
See
Ohio Rev.Code § 2329.66. The Trustee bears the burden of establishing by a preponderance of the evidence that the exemption claimed should not be allowed. Fed. R. Bankr.P. 4003(c);
Baumgart v. Alam (In re Alam),
The exemption at issue in this appeal is Ohio Rev.Code § 2329.66(A)(1), which provides in pertinent part:
(A) Every person who is domiciled in this state may hold property exempt from execution, garnishment, attachment, or sale to satisfy a judgment or order, as follows:
(1) ...
(b) ... [T]he person’s interest, not to exceed twenty thousand two hundred dollars, in one parcel or item of real or personal property that the person or a dependent of the person uses as a residence.
The Debtors argue that the bankruptcy court erred in sustaining the Trustee’s objection to their homestead exemption because they were using the Ohio home as their principal residence on the date they filed their petition for relief. They assert that a requirement to intend to remain at the property in order to claim the exemption is contrary to the policy of liberally construing exemption statutes in favor of the debtor, and сontrary to the plain meaning of the exemption statute which does not address the intent of debtors.
The Trustee, however, asserts that for over 100 years Ohio courts have recognized the intent to occupy a homestead as the necessary element in establishing an allowable homestead exemption. Therefore, the mere fact that the Debtors resided in the Ohio home on the date of filing is insufficient to claim the homestead exemрtion. The Trustee argues that the Debtors were merely temporary occupants of the Ohio home because they had signed a contract to sell and, because they had no intention to make the Ohio home their permanent residence, they are not entitled to a homestead exemption. In support of her position, she cites to Ohio case law allowing a debtor to claim the homestead exemption where he has temporarily abandoned the property, but lacks the intent to abandon it permanently.
See, e.g., Jackson v. Reid,
The cases cited by the Trustee are inap-posite as they do not address the issue before the Panel — whether a debtor who has used, and is currently using, a home for a principal residence must also intend to occupy the residence in the
future
to claim a homestead exemption. In fact, no Ohio state court has addressed this issue. The Panel therefore must anticipate how the Ohio Supreme Court would resolve the issue. In this regard, the Panel notes that several bankruptcy courts interpreting Ohio law have addressed the issue, albeit with differing results.
Compare In re
In
Cope,
the debtor filed a petition for relief and claimed the Ohio homestead exemption in a house he owned and had resided in for a number of years. At the time of that filing, the home was used as the debtor’s residence. However, three days after filing his petition, the debtor moved from and abandoned the property. Based upon the debtor’s abandonment of the property three days after filing, the trustee objected to the claimed exemption. The bankruptcy court denied the trustee’s objection and allowed the exemption because the debtor was using the property as a residence at the time he filed his petition and claimed the exemption.
In re Cope,
In reaching its conclusion, the
Cope
court first explained that “[c]ase law strongly supports the proposition that a debtor’s right to exemptions is determined as of the date the Petition is filed.”
Id.
at 427 (citing,
inter alia, White v. Stump,
In
In re Pagan,
The
Pagan
court based its holding upon the historical purpose of the exemption to provide a home to families of insolvent debtors and cases interpreting prior homestead exemption statutes.
See, e.g., Stewart v. Boyd,
The bankruptcy court in
Garland
reached a similar conclusion. There, the debtоr’s wife and children resided in the family home on the date the debtor filed his petition for relief and claimed the homestead exemption. However, the property was listed for sale prior to the petition date, a sale contract was executed shortly after the filing date, and the sale was finalized approximately two months later. While acknowledging that, on its face, the exemption statute does not require specific intent to remain in the residence, the bankruptcy court was convinced by the historical origin of the exemption and judicial interpretations of the statute, including the
Pagan
decision, that such specific intent to remain is indeed required.
In re Garland,
In the appeal before the Panel, the bankruptcy court also relied upon Ohio case law decided under previous exemption statutes where the subjective intent of the debtor was found important.
See McComb v. Thompson,
The Panel disagrees with the conclusion of the bankruptcy court in the instant appeal and chooses to follow the well-reasoned analysis of the bankruptcy court in
Cope.
The Debtors’ intent to abandon the Ohio home post-petition is irrelevant and does not defeat the establishment of an allowable homestead exemption under Ohio law. On the date they filed their petition for relief, the Debtors were using
When the law speaks of property which is exempt and of rights to exemptions, it of course refers to some point of time. In our opinion this point of time is the one as of which the general estate passes out of the bankrupt’s control, and with respect to which the status and rights of the bankrupt, the creditors and the trustee in other particulars are fixed.
In fact, the Sixth Circuit Court of Appeals long ago recognized that a debtor’s right to a homestead exemption under Ohio law is determined as of the date of the bankruptcy.
In re Stitt,
If he has voluntarily abandoned [his residence] before claiming it as exempt, his right to claim it is gone. He cannot have two homesteads. If he leaves his homestead and moves elsewhere, making the latter residence his home, his right to the former is gone.
What the homestead is, is a question of fact. If the debtor be living upon the premises at the time the exemption is claimed, his right cannot be disputed. ...
Stewart v. Boyd,
In the cases cited by the Trustee in support of her position, the courts concluded that the intent of a debtor to occupy a residence was a prerequisite to an allowable homestead exemption. However, those cases are inapplicable where the debtor is residing on the property and using it as a residence at the time the exemption is claimed. The issue of intent arose in the cases cited by the Trustee because the debtors were, at least temporarily, not residing on the claimed property. For purposes of the homestead exemption, however, abandonment of property consists of both an intent to abandon
and
actually leaving the premises.
Meadow Wind Health Care Ctr. v. McInnes,
No.l999CA00338,
On the date the Debtors filed their petition, they were using the residence in question. Without both intending to abandon the residence
and
physically abandoning the residence, the Debtors’ occupancy of the home continued their residence status when the petition was filed entitling them to claim the homestead exemption in the aggregate amount of $40,400. This conclusion conforms with the rule that Ohio exemption statutes are to be construed liberally in favor of the debtor, and that any doubt in interpretation should be in favor of granting the exemption,
Baumgart v. Alam (In re Alam),
V. CONCLUSION
Exemptions are determined on the date a bankruptcy petition is filed. The Debtors were using their property as their principal residence on the date they filed their petition. Therefore, the Debtors’ intention to leave their property post-petition is irrelevant and does not defeat their сlaim to the homestead exemption provided by Ohio Rev.Code § 2329.66(A)(1). The order of the bankruptcy court sustaining the Trustee’s objection to the Debtors’ homestead exemption and granting the Trustee’s motion for turnover of proceeds from the sale of the Debtors’ residence must, therefore, be reversed and remanded for proceedings consistent with this opinion.
Notes
. None of the cases cited by the bankruptcy court involve the issue. In fact, in eаch of these cases, the property at issue was undeveloped land on which the debtors did not reside. The question was whether their intent to make the property their residence in the future was sufficient to claim their respective state’s homestead exemptions.
. In
McComb v. Thompson,