In re Kelley

*2 Second Memorandum re Homestead Exemption

Chapter 7 debtor Donald Kelley moved out of his residence at 901 South Main, Angel’s Camp, California, in 1995. After that time, he resided in rental property in Napa, California. He essentially used the Angel’s Camp property as a storage shed and had no incidents of residence in Angel’s Camp. For about five years after Kelley left Angel’s Camp, his property was vacant; since 2000, he has rented the property to a cousin.

Kelley filed his bankruptcy petition on March 8, 2002. He originally claimed the property as exempt under California’s “automatic” homestead law, Code of Civil Procedure § 704.710 et seq. The trustee objected on the ground that Kelley did not reside on the property when he filed. The court sustained the objection. Kelley then amended his schedules to claim the property exempt under California’s “declared” homestead law, Code of Civil Procedure § 704.910 et seq. The court must now rule on the same facts but different applicable law.

Under California law, a declared homestead is very resilient. Once a valid homestead is established and a declaration of homestead is recorded, it can be abandoned only in the manner…