In re Sain

This decision explores whether California law protects the homestead proceeds received by Debtor Douglas W. Sain ("Douglas") from his Chapter 7 Trustee Richard M. Kipperman ("Trustee"). At all relevant times, Douglas has lived at 11118 Mesa Top Place, San Diego, CA 92121 ("Mesa Top"), which Douglas bought back from Trustee during his bankruptcy case. Although Douglas made substantial contributions to finance the sale from personal assets that were not property of the estate, his father, Robert W. Sain ("Robert"), 2 actually took title to facilitate obtaining *327 a loan for the purchase. Douglas retained lease/option rights, however. All told, Douglas invested at least $90,635.43 in Mesa Top, including paying $50,000 in attorneys' fees incurred to buy his interest and defend his homestead rights.

Over a year after the sale escrow closed, Trustee brought a motion for turnover of the $75,000 in homestead proceeds Douglas received from the sale. Trustee claimed Douglas was not entitled to the proceeds since he did not acquire fee title in Mesa Top and did not reinvest the proceeds in a new homestead after receipt. By involving both a lease and a debtor's repurchase of a home from a…