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Definition: “Dwelling” SBAM Partners v. Wang

Section 704.710, subdivision (a) defines “dwelling” as “a place where a person resides.”  Section 704.710, subdivision (c) provides that “‘[h]omestead’ means the principal dwelling (1) in which the judgment debtor or the judgment debtor’s spouse resided on the 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 determination that the dwelling is a homestead.  Where exempt proceeds from the sale or damage or destruction of a homestead are used toward the acquisition of a dwelling within the six-month period provided by Section 704.720,[[5]] ‘homestead’ also means the dwelling so acquired if it is the principal dwelling in which the judgment debtor or the judgment debtor’s spouse resided continuously from the date of acquisition until the date of the court determination that the dwelling is a homestead, whether or not an abstract or certified copy of a judgment was recorded to create a judgment lien before the dwelling was acquired.”

In sum, the homestead character of the property is determined as of the date of attachment of the judgment lien.  For already-owned property, attachment occurs at the time the lien is created.  For after-acquired property, attachment occurs on the date of purchase.  The proceeds from a voluntary sale of an already-exempted homestead are exempt for six months.  If the exempt proceeds are used to purchase a dwelling within that six-month period, such dwelling may also qualify for a homestead exemption, even if a judgment lien has already been recorded.  In this case, Wang’s condominium was purchased with non-exempt proceeds after SBAM recorded the judgment.  Therefore, attachment of the judgment lien and the (possible) creation of the homestead occurred simultaneously—at the time of purchase.  Whether the judgment lien is subject to a homestead exemption in such a case is an issue of first impression in California.

The Legislative Committee Comment to section 704.710 states, in part, that “[s]ubdivision (c) is intended to preclude a judgment debtor from moving into a dwelling after creation of a judgment lien or after levy in order to create an exemption.”  The use of the word “creation” instead of “attachment” produces some ambiguity in ascertaining the legislative intent.  SBAM argues that the lien was “created” on March 30, 1995, when the judgment was recorded, in which case Wang clearly would not be entitled to a homestead exemption on the condominium subsequently purchased in November 1997.  Wang claims that the lien on his condominium was not “created” until it actually attached, which according to section 697.340, subdivision (b), was the date of purchase on November 17, 1997.  Since he lived in the condominium on the date of purchase, the homestead and the lien attached at the same time, and Wang argues that the homestead has priority over the lien.[6]

“ ‘Words used in a statute or constitutional provision should be given the meaning they bear in ordinary use.  [Citations.]  If the language is clear and unambiguous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature (in the case of a statute) or of the voters (in the case of a provision adopted by the voters).  [Citations.]  [¶]  But the ‘plain meaning’ rule does not prohibit a court from determining whether the literal meaning of a statute comports with its purpose or whether such a construction of one provision is consistent with other provisions of the statute.  The meaning of a statute may not be determined from a single word or sentence; the words must be construed in context, and provisions relating to the same subject matter must be harmonized to the extent possible.  [Citation.]  Literal construction should not prevail if it is contrary to the legislative intent apparent in the statute.  The intent prevails over the letter, and the letter will, if possible, be so read as to conform to the spirit of the act.  [Citations.]  An interpretation that renders related provisions nugatory must be avoided [citation]; each sentence must be read not in isolation but in the light of the statutory scheme [citation]; and if a statute is amenable to two alternative interpretations, the one that leads to the more reasonable result will be followed [citation].’  [Citation.]”  (Gonzalez v. Toews (2003) 111 Cal.App.4th 977, 981.)  “Statements in legislative committee reports which are in accordance with a reasonable interpretation of a statute will be followed by courts to assist in interpretation of legislative intent.  [Citation.]”  (Wolfe v. Lipsy (1985) 163 Cal.App.3d 633, 642, fn. 2.)

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