The Homestead Acts are state laws that protect certain property (e.g., the family home) from the creditors’ claims and prevent unilateral spousal alienation of that property. These laws allow a householder or head of a family to designate a house and land as his or her homestead, and exempt that property from execution of his or her general debts.
Although the Homestead Acts differ from state to state, the common features of these laws include the requirements that the owner have a family and that the estate consist of a dwelling and the property underneath it. Homestead rights are generally limited to a specific value or acreage.
Upon the death of the owner, the property interest stays with the surviving spouse for life and may not be defeated by the decedent’s will. In a few states, however, the surviving spouse must elect between the homestead and a contrary will provision.
In re Ward, 595 B.R. 127 (Bankr. E.D.N.Y. 2018):
The New York homestead exemption allows a debtor to exempt his or her interest in real property not exceeding a specified dollar amount in value above liens and encumbrances, that is “owned and occupied as a principal residence” from the application of a money judgment, unless the judgment was recovered wholly for the purchase price of the property (i.e., a mortgage foreclosure). CPLR § 5206(a). The rationale behind New York’s homestead exemption is a clear and long standing one. New York has provided a homestead exemption since 1850 in order to protect a homeowner from a forced sale of his or her dwelling to satisfy a money judgment.
The statute is founded upon considerations of public policy, and has introduced a new rule in regard to the extent of property which shall be liable for a man’s debts. The legislature were of opinion, looking to the advantages belonging to the family state in the preservation of morals, the education of children, and possibly even, in the encouragement of hope in unfortunate debtors, that this degree of exemption would promote the public welfare, and perhaps in the end, benefit the creditor.
In re Arrol, 170 F.3d 934 (9th Cir. 1999):
It has been said the general rule is that state homestead laws have no extraterritorial force and are only available to residents of the state. However, unlike the applicable Texas law, which explicitly limited homesteads to dwellings located within the state of Texas, 91 B.R. at 404, the California exemption statute does not limit the homestead exemption to dwellings within California:
“Homestead” 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.
Cal. Civ. Pro. Code § 704.710(c).
The trustee argues the California exemption should not apply to Arrol’s home in Michigan because the legislative history of California’s homestead law suggests that its purpose is to establish a sound and prosperous California community. We understand the trustee’s argument, but we reject it because we do not read the cases the trustee cites as espousing a legislative history that is inconsistent with the bankruptcy court’s interpretation of the broad language of California Code of Civil Procedure § 704.710(c). To the contrary, California case law is consistent with that interpretation.
In Strangman v. Duke, 140 Cal.App.2d 185, 295 P.2d 12 (1956), the California court of appeals articulated the legislative goal of “provid[ing] a place for the family and its surviving members, where they may reside and enjoy the comforts of a home, freed from any anxiety that it may be taken from them against their will. . . .” Id. at 190, 295 P.2d 12 (internal quotations and citations omitted). This goal exists independently from state boundary lines.