In Re Eric Anderson and Anna Anderson, Debtors. Redwood Empire Production Credit Association v. Eric Anderson and Anna Anderson

I. Facts

The debtors in this case recorded a Declaration of Homestead on their home in Mendocino, California in October 1982. After the declaration was recorded, the California legislature substantially altered statutory provisions for homesteads by enacting the new Enforcement of Judgments Act (“NEJA”), which became effective on July 1, 1983. In December 1983, Redwood Empire Production Credit Association (“REPCA”) recorded an Abstract of Judgment (judgment lien) on the Mendocino home, in which the debtors have about $30,000 in equity.

In order that Mr. Anderson might be closer to the college which he was attending, the debtors moved from their Mendocino house in January 1984 and leased it. They purchased a second house in Sonoma County and moved into it. Four months later, the Andersons filed a Chapter 7 bankruptcy petition.

When the petition was filed, the Andersons had little or no equity in the Sonoma home. The debtors scheduled a homestead exemption on the Mendocino home based on the recorded Declaration of Homestead. REPCA objected to the exemption on the grounds that California law requires actual residence in the homestead and that the debtors did not reside in their…