In Re Jacobson

The homestead exemption requirement of reinvestment of proceeds applies to homestead sales that occur after a bankruptcy judgment has already been entered.

This claim was brought by the bankruptcy trustee claiming that certain property and money be placed in the trust. The Jacobson's filed bankruptcy and claimed the homestead exemption under California law that placed a stay on the sale of their house. Later the Jacobson's house was sold after a judge lifted the stay. The proceeds covered the liens against the property and gave the Jacobson's the statutorily proscribed amount under the homestead exemption. However, under California law in order for the exemption to apply the proceeds must be reinvested in a new homestead within six months. The Jacobson's failed to follow this requirement and the bankruptcy trustee requested that these proceeds be turned over into the trust. The Court agreed that this was a statutory requirement and required compliance. The Court held that it did not matter if a bankruptcy judgment was placed before the sale of the proceeds, the Jacobson's still received their exemption, in the amount of 150,000 dollars, and failed to follow the terms of maintaining their exemption. The Court, however, did not agree with the trustee that a property held solely in the husband's name and purchased with non-marital property was subject to transfer into the bankruptcy trust because the trustee failed to prove that the property belonged in the trust and did not have standing to raise the claim that the property belonged in a prior bankruptcy trust. REVERSED in part, AFFIRMED in part and REMANDED.