California
Appeals
California Appeals
eBook
Definitions
 

Definition: HomesteadSBAM Partners v. Wang

AB 707 was again amended on April 29, 1982 so that subdivision (c) of section 704.710 would provide that “[h]omestead means the principal dwelling (1) in which the judgment debtor or the judgment debtor’s spouse actually 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 actually 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, ‘homestead’ also means the dwelling so acquired if it is the principal dwelling in which the judgment debtor or the judgment debtor’s spouse actually 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.”  (Assem. Bill No. 707 (1981‑1982 Reg. Sess.) as amended April 19, 1982, p. 122-23.)  This amendment added the italicized provision, resolving the concern raised in the California Law Revision Commission’s report by allowing debtors a homestead exemption on an after-acquired dwelling purchased with exempt proceeds despite a prior recorded judgment.  This became the final version as passed by the Legislature and signed by the Governor.

The Legislative Committee Comment to the enacted provisions in section 704.710 states, in part, that “[s]ubdivision (c) also makes clear that, even though an abstract of judgment has been recorded to create a judgment lien, the existence of such lien does not prevent a homestead exemption on after-acquired property which is acquired as the principal dwelling using exempt proceeds.” (emphasis added)  It is noteworthy that the current Legislative Committee Comment is identical to the comment in the initial Tentative Recommendation except for the addition of the words “using exempt proceeds” after “principal dwelling.”  This confirms that the Legislature intended to narrow the protection of the homestead exemption for after-acquired property to protect only such after‑acquired property as was purchased with exempt proceeds.

The legislative history establishes that while there is no general homestead exemption for an after-acquired dwelling, the debtor still has the benefit of the six‑month “safe harbor” exempting the proceeds from the sale of his former homestead, which can be used to acquire a new homestead.  Moreover, if section 704.710 were interpreted to provide an exemption for any after-acquired dwelling whether or not it was acquired with exempt proceeds, there would be no need for the provision specifically allowing a homestead exemption on an after-acquired dwelling purchased with exempt proceeds.

Only a handful of courts in other jurisdictions have reached the same or similar issue.  In each of those cases, however, the court held that the homestead exemption had priority over the judgment lien.  (See Bowers v. Mozingo (Fla. Dist. Ct. App. 3d Dist. 1981) 399 So.2d 492; Herndon v. Grilz (Nev. 1996) 920 P.2d 998; Maples v. Rawlins (Tenn. 1900) 58 S.W. 644; Northern State Bank v. Toal (Wis. 1975) 230 N.W.2d 153; Stowell v. Kerr (Kan. 1905) 83 P. 827; Wallis v. Wendler (Tex. Civ. App. 1901) 65 S.W. 43.)  Wang cites some of these decisions in support of his argument, and also makes a policy argument that the homestead statutes are to be liberally construed in favor of the debtor.  “It is true that it is the policy of the law to favor homesteads to a certain extent, for the protection and preservation of homes and families.  But there is a limit beyond which this policy should not be allowed to control.  It should not be invoked for the purpose of establishing a new application and interpretation of a statute, contrary to its true meaning and in the face of a long-established understanding and usage based on its true meaning.”  (Weber v. McCleverty (1906) 149 Cal. 316, 319.)  “Moreover, and particularly where the legislative purpose is otherwise apparent, ‘ “criticisms of policy, wisdom or technique inherent in any legislative enactment are ‘matters with which the courts have no concern, such arguments being proper ones to address to the [L]egislature for its determination.’ ” ’  [Citation.]”  (Horwath v. Local Agency Formation Com. (1983) 143 Cal.App.3d 177, 182.)

In sum, the legislative history of section 704.710 clearly indicates that it does not allow a homestead exemption on property acquired by the debtor after the judgment has been recorded unless it was purchased with exempt proceeds from the sale, damage or destruction of a homestead within the six-month safe harbor period.  Since there is no evidence that Wang’s condominium was purchased with such proceeds, he is not entitled to a homestead exemption.  The trial court did not err in denying Wang’s claim for such exemption.

eBook Master Table of Contents   
Definitions-Table of Contents
Standard of Review-Table of Contents

Previous Page