Bruce Emerd James and Andrea B James

MEMORANDUM OF DECISION - 1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF IDAHO
______________________________________________________
In Re:
Bankruptcy Case
BRUCE EMERD JAMES and 	No. 04-42053
ANDREA B. JAMES,
Debtors.
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MEMORANDUM OF DECISION
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Appearances:
Anita Moore, Caldwell, Idaho, Attorney for Debtors.
R. Sam Hopkins, Pocatello, Idaho, Chapter 7 Trustee.
Background and Facts
Debtors Bruce and Andrea James (“Debtors”) filed a joint voluntary
Chapter 7 petition on September 28, 2004. Docket No. 1. In Schedules A and C,
Debtors disclosed that they owned a fourteen acre homesite (the “Property”) in
Minidoka County, which they claimed exempt as a homestead under Idaho Code
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§§ 55-1003 and 55-1004. Docket No. 4. On November 15, 2004, Chapter 7
Trustee R. Sam Hopkins (“Trustee”) filed a timely objection to Debtors’
homestead exemption, asserting that because they did not reside on the Property,
Debtors were not entitled to an exemption absent a properly recorded declaration.
Debtors responded to Trustee’s objection on December 15, 2004, arguing that they
had in fact executed and recorded an appropriate declaration of homestead as to
the Property. Docket No. 7.
On January 12, 2005, the Court conducted a hearing on Trustee’s
objection at which the Debtors submitted a copy of their recorded declaration of
homestead. Ex. 1. The declaration was executed by Debtors on November 22,
2004, nearly a month after they filed their bankruptcy petition and one week after
the Trustee objected to their exemption. It was not recorded with the county
recorder until December 22, 2004.
At the hearing, the parties stipulated that Debtors purchased the
Property in July, 2002, with the intent to some day construct a permanent
residence there. Debtors’ declaration indicates that the Property is bare ground
located in Rupert, Idaho, while their petition discloses that, at the time of filing,
they lived in Burley, Idaho. Ex. 1; Docket No. 1. At the conclusion of the
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1 This Memorandum of Decision is the Court’s findings of fact and conclusions
of law. Fed. R. Bankr. P. 7052, 9014.
MEMORANDUM OF DECISION - 3
hearing, the Court took the matter under advisement. 1
Debtors argue that since the bankruptcy estate included the Property
on the petition date, and Idaho law does not require debtors to file declarations of
homestead within any specific time limits, Debtors should be allowed an
exemption despite the fact that the declaration was executed and recorded after
they filed their bankruptcy petition. Trustee disagrees, asserting that, to be valid
in bankruptcy, the declaration must be recorded prior to filing the petition.
Disposition
In Idaho, a debtor’s bankruptcy exemptions are determined by
reference to state law. 11 U.S.C. § 522(b); Idaho Code § 11-609. Under Idaho
law, a debtor may claim a homestead exemption in real property. Idaho Code §§
55-1001–1011; In re Koopal, 226 B.R. 888, 890, 98.4 I.B.C.R. 98, 99 (Bankr. D.
Idaho 1998); In re Millsap, 122 B.R. 577, 579, 91 I.B.C.R. 5, 7 (Bankr. D. Idaho
1991). The Court liberally construes the homestead statutes in favor of the debtor.
In re Steinmetz, 261 B.R. 32, 32, 01.1 I.B.C.R. 28, 28 (Bankr. D. Idaho 2001);
Koopal, 226 B.R. at 890; In re Peters, 168 B.R. 710, 711, 94 I.B.C.R. 44, 44
(Bankr. D. Idaho 1994). As the objecting party, Trustee bears the burden of
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2 Because the declaration was not timely executed and recorded, the Court need
not decide whether the declaration was otherwise adequate under the requirements of
Idaho Code § 55-1004(3). The Court notes, however, that Debtors’ declaration does not
include an estimate of the property’s actual cash value, which Idaho Code § 55-
1004(3)(c) expressly requires. Without that information, Debtors’ declaration may be
invalid even if it had been timely filed. See In re Field, Mem. Decision at 19–20
(holding that, where a declaration failed to include elements required by statute, the
declaration was invalid).
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proving an exemption is not proper. Fed. R. Bankr. P. 4003(c); Steinmetz, 261
B.R. at 32, 01.1 I.B.C.R. at 28.
Because Debtors’ Property is “unimproved land,” see Idaho Code
§ 55-1001(2), to establish an exemption Debtors were required to execute a
declaration of homestead containing the information specified in Idaho Code § 55-
1004(3) and to file that declaration in the recorder’s office of the county in which
the land is located. Idaho Code § 55-1004(2), construed in In re Field, 05.1
I.B.C.R. ____, Ch. 7 Case No. 01-41575, Docket No. 29 (Bankr. D. Idaho Jan. 18,
2005). Here, Debtors filed such a declaration. But Debtors’ attempt to establish a
homestead exemption was untimely for bankruptcy purposes.2 The relevant date
for determining the status of a claim of homestead exemption is the date of filing.
11 U.S.C. § 522(b)(2)(A); Culver, L.L.C. v. Chiu (In re Chiu), 266 B.R. 743, 751
(B.A.P. 9 th Cir. 2001) (“[T]he nature and extent of exemptions is determined as of
the date that the bankruptcy petition is filed.”). And, when a declaration is
required, as is the case here, the homestead exemption will not arise until the
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declaration is actually recorded. Idaho Code § 55-1004(1) .
No new legal trail need be blazed here. In 1924, the Supreme Court
decided White v. Stump, 266 U.S. 310 (1924). While White was decided under the
Bankruptcy Act and interpreted the Idaho homestead statutes before Idaho
recognized “automatic” homestead exemptions, the holding of that case would
appear to control here: when a declaration of homestead is required by Idaho law,
the homestead exemption “arises when the declaration is filed, and not before. Up
to that time the land is subject to execution and attachment like other land.” Id. at
310. In other words, if a declaration has not been executed and properly recorded
on the date the bankruptcy petition is filed, the debtors’ real property is not
exempt. Id. at 313–14.
In this bankruptcy case, Debtors recorded their declaration almost
three months after they filed their bankruptcy petition. Without a recorded
declaration on file when the bankruptcy case was commenced, the Property can
not be exempted.
Conclusion
Because they had not recorded a declaration of homestead before
they filed their petition, Debtors are not entitled to a homestead exemption in the
Property in this bankruptcy case. The Trustee’s objection will be sustained by
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separate order.
Dated: January 26, 2005
Honorable Jim D. Pappas
United States Bankruptcy Judge
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