In re Hughes

• Decision Date: 26 March 2004
• Docket Number: No. 04-10061-DHW.,04-10061-DHW.
• Citation: In re Hughes, 306 B.R. 683 (Bankr. M.D. Ala. 2004)
• Parties: In Noel T. HUGHES and Tracie Hughes, Debtors.
• Court: U.S. Bankruptcy Court — Middle District of Alabama

306 B.R. 683

In Noel T. HUGHES and Tracie Hughes, Debtors.

No. 04-10061-DHW.

United States Bankruptcy Court, M.D. Alabama, Northern Division.

March 26, 2004.

Michael D. Brock, Enterprise, AL, for Debtors.

Collier H. Espy, Jr., Dothan, AL, trustee.

ORDER OVERRULING TRUSTEE'S OBJECTION TO DEBTOR'S CLAIM OF HOMESTEAD EXEMPTION

DWIGHT H. WILLIAMS, Bankruptcy Judge.

On February 17, 2004, the trustee in this chapter 7 case, Collier H. Espy, Jr., filed an objection to the homestead exemption claimed by the debtor, Tracie Hughes.¹The matter was set for hearing in Dothan, Alabama on March 10, 2004.

The relevant facts are not in dispute.Tracie Hughes and her husband filed a chapter 7 petition on January 12, 2004.Tracie Hughes disclosed an ownership interest in a one-acre parcel of land located on Coffee County Road 623 near Enterprise, Alabama, which she valued at $5,544 (Schedule A).She claims $5,000 (Schedule C) of that value exempt under the Alabama homestead exemption statute, Ala.Code § 6-10-2(1975).²

The debtors actually reside in a mobile home located on land which they lease from a relative.The one-acre parcel claimed exempt by the debtor is contiguous to the leased property, and the debtors use the one-acre parcel for parking their vehicles and as a playground for their children.

The trustee contends that exemption claim is improper because the debtor does not reside on the property claimed exempt.

11 U.S.C. § 522 creates exemptions for debtors who file for relief under title 11.Nevertheless, the statute permits the States to opt out of the federal exemptions and claim only those exemptions permitted by State law.See11 U.S.C. § 522(b).Alabama has done just that.SeeAla.Code § 6-10-11(1975).Therefore, state law governs the propriety of this exemption claim.

Exemption statutes should be liberally interpreted,³ especially those involving the homestead: "The law looks with favor on the homestead, and homestead statutes are to be construed liberally in furtherance of the public policy they express."First Alabama Bank v. Renfro,452 So.2d 464, 468(Ala.1984).⁴

Under Alabama law, both ownership and occupancy are prerequisites to the "rightful claim of a homestead exemption."Beard v. Johnson,87 Ala. 729, 6 So. 383, 383-84(1889);Frazier v. Espalla,220 Ala. 446, 125 So. 611, 612(1929);Blum v. Carter,63 Ala. 235(1879).In the instant case, ownership is not at issue.The only issue is whether the debtor "occupied" the one-acre parcel in question.

Protection under the homestead exemption statute is extended to property devoted to "use and occupancy as a home, a dwelling place."Blum v. Carter,63 Ala. 235(1879)."The Alabama exemption, protecting the interest of a person in his residence, applies because of the use to which the land is put, not because of the fixtures on it or the quality of the debtor's interest."In re Rester,46 B.R. 194, 196(S.D.Ala.1984)(emphasis added).

In the instant case, the debtors use the property claimed exempt for homestead purposes — for parking their vehicles and as a playground for their children.There is no evidence of any use of the property inconsistent with homestead purposes.

Under Alabama law, the presence of a dwelling house or mobile home on a tract of realty is not necessarily a prerequisite to an allowable homestead exemption claim.In Greer v. Altoona Warehouse Co.,246 Ala. 297, 20 So.2d 513, 515(Ala.1945) it was held that a tract, separate from the residence, could be claimed under the homestead exemption if such tract were impressed with the character of a homestead by its use and occupation in connection with the residential tract.Similarly, the Alabama Supreme Court has found "that a disconnected tract, not contiguous to the tract upon which the dwelling is located, bona fide and habitually used as a part of it, may, by such use, become impressed with the homestead character notwithstanding its remoteness or separation from the mansion house."Sloan v. Fields,221 Ala. 54, 127 So. 816(Ala.1930)(citingDicus v. Halls,83 Ala. 159, 3 So. 239(Ala.1887);Shubert v. Winston,95 Ala. 514, 11 So. 200(Ala.1892);Jaffrey v. McGough,88 Ala. 648, 7 So. 333(Ala.1890)).

As in the case at bar, the Sloanclaimant resided on leased property and claimed a homestead exemption in another tract in which he had an ownership interest.Unlike the case at bar, the tract claimed in Sloan was not even contiguous with the residential leased property.

This authority convinces the court that it is the use to which the land is put more than the presence of a dwelling house and actual physical residence thereon which controls whether a homestead exemption claim is proper.The one-acre tract claimed sub judice has been impressed with the character of a homestead by the debtors' bona fide and habitual use of it for homestead purposes.The parking of personal vehicles thereon so as to permit...