In re Nilsson , 2013 NV 101 ( 2013 )

129 Nev., Advance Opinion I 0 I
IN THE SUPREME COURT OF THE STATE OF NEVADA
IN RE: DAVID ORRIN NILSSON, No. 61070
DEBTOR.
WILLIAM A. VAN METER,
Appellant,
FILED
vs. DEC 2 6 2013
DAVID ORRIN NILSSON, atzt/
lN DEMAN
siA
Respondent. P EME
IA F DEPUTY CLERK
Certified question, pursuant to NRAP 5, regarding homestead
exemptions. United States Bankruptcy Court for the District of Nevada;
Bruce T. Beesley, Judge.
Question answered.
Woodburn & Wedge and John F. Murtha, Reno,
for Appellant.
Christopher P. Burke, Reno,
for Respondent.
BEFORE THE COURT EN BANC.
OPINION
By the Court, GIBBONS, J.:
The United States Bankruptcy Court for the District of
Nevada has certified a question of law to this court regarding the ability of
a debtor to claim Nevada's homestead exemption. The certified question
asks:
3/10/W Cvrreeii-J eitifer-6 /212146t-5. cgs -39,9
Can a debtor properly claim a homestead
exemption for his interest in real property under
NRS 21.090(1)(/) and NRS Chapter 115 when
debtor himself does not reside on the property but
his minor children do? Put another way, does a
debtor have to actually reside on the property that
is the subject of a claimed homestead exemption
under NRS 21.090(1)(/) and NRS Chapter 115, or
is it sufficient that a debtor's minor children reside
on the property in order to qualify for the
exemption?
In re Nilsson, No. BK-11-52664-BTB (Bankr. D Nev. May 7, 2012). We
conclude that a debtor must actually reside on real property in order to
properly claim a homestead exemption for that property.
FACTS AND PROCEDURAL HISTORY
Respondent David Orrin Nilsson (David) and his ex-wife,
Kelli, married in 1990. They have three children. In 1994, David and
Kelli purchased property in Reno as joint tenants and built a home on it a
year later (the Reno property). David and Kelli lived together in the house
with their children until 2006, when David moved out of the Reno
property and began living in a travel trailer in Sparks. Kelli filed for
divorce that same year.
The Nilssons' divorce decree provided that Kelli would reside
at the Reno property with the children until it sold. Although the decree
provided that the Reno property would be listed for sale on July 1, 2008, or
as otherwise agreed, it does not appear that the property was ever listed
for sale. Thus, David and Kelli each hold a half interest in the property as
tenants in common.
In early 2011, over three years after the final divorce decree
was filed, Kelli recorded a homestead declaration with Washoe County,
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listing the Reno property as her individual homestead. David did not join
in the declaration, although Kelli noted that his name was on the Reno
property's title. Subsequently, David filed for Chapter 7 bankruptcy,
which was eventually converted to Chapter 13. On his schedule of real
property assets, he claimed an interest in the Reno property as half-owner
with Kelli. On his schedule of personal property, he listed the Sparks
travel trailer and noted that he lived in it.
After a series of amendments, David laimed the Reno
property as exempt from inclusion in his bankruptcy estate based on,
among other things, the homestead exemption. Appellant William A. Van
Meter, the bankruptcy trustee, objected to David's claimed exemption of
the Reno property insofar as he had not resided on it since 2006. David
responded that, even though he had not lived on the Reno property for
several years, he could nonetheless claim the exemption in order to protect
his interest in the Reno property for the benefit of his children. The
bankruptcy court certified the question to this court without ruling on the
trustee's objection. We subsequently accepted the question and directed
briefing.
The trustee argues that David cannot claim a homestead
exemption on the Reno property because he does not reside there, he did
not record a declaration of homestead, and he cannot now record a valid
declaration of homestead on the Reno property. David responds that he
can claim a homestead exemption on the Reno property even though he
does not reside on it, and that he can exempt the Reno property through
constructive occupancy because his children still live there and by tracing
the homestead back to his family's residency there.
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DISCUSSION
The homestead exemption
"[T]he homestead exemption can only be extended or limited
by the statutes or constitutional provision that created it." Savage v.
Pierson, 123 Nev. 86, 90, 157 P.3d 697, 699 (2007). The homestead
exemption was intended to protect "the family home despite financial
distress, insolvency or calamitous circumstances," Jackman v. Nance, 109
Nev. 716, 718, 857 P.2d 7, 8 (1993), as the preservatioh of the home was
"deemed of paramount importance as a matter of public policy." I.H. Kent
Co. v. Miller, 77 Nev. 471, 475, 366 P.2d 520, 521-22 (1961). Nevada
construes homestead laws liberally in favor of the debtor and his or her
family. Jackman, 109 Nev. at 718, 857 P.2d at 8. Nevertheless, we have
made clear that the "laws exempting the homestead are not based upon
principles of equity." I.H. Kent Co., 77 Nev. at 475, 366 P.2d at 521-22.
Thus, while the statutory provisions relating to homesteads should be
liberally construed, this liberal interpretation "can be applied only where
there is a substantial compliance with [the homestead] provisions."
McGill v. Lewis, 61 Nev. 28, 40, 116 P.2d 581, 583 (1941).
Determining whether a debtor must reside on real property in
order to claim a homestead exemption requires us to interpret several
constitutional and statutory provisions. See Nev. Const. art. 4, § 30; NRS
Chapter 115; see also Jackman, 109 Nev. at 718, 857 P.2d at 8 ("The
homestead exemption, unknown to the common law, was given birth as a
constitutional and statutory response to public policy and sentiment."). In
interpreting constitutional and statutory provisions, we look first to the
provision's language. See MGM Mirage v. Nev. Ins. Guar. Ass'n, 125 Nev.
223, 228, 209 P.3d 766, 769 (2009). If the constitutional or statutory
4
language "is plain and unambiguous, and its meaning clear and
unmistakable, there is no room for construction, and the courts are not
permitted to search for its meaning beyond the statute itself." Hamm v.
Arrowcreek Homeowners' Ass'n, 124 Nev. 290, 295, 183 P.3d 895, 899
(2008) (internal quotations omitted).
Under the United States Bankruptcy Code (Code), a debtor
who files for bankruptcy may exempt certain assets from his or her estate,
thus preventing creditors from reaching the exempted assets to satisfy
outstanding debts. 11 U.S.C. § 522(b)(1) (2006). The Code provides that
states may opt out of the federal exemption scheme and instead provide
for state law exemptions. In re Virissimo, 332 B.R. 201, 203 (Bankr. D.
Nev. 2005); 11 U.S.C. § 522(b)(2) (2006). Nevada is an opt-out state and
lists its property exemptions in NRS 21.090. NRS 21.090(1); In re
Christensen, 122 Nev. 1309, 1314, 149 P.3d 40, 43 (2006). Under Nevada
law, the "homestead as provided for by law, including a homestead for
which allodial title has been established and not relinquished and for
which a waiver executed pursuant to NRS 115.010 is not applicable" may
be exempted from the bankruptcy estate.' See NRS 21.090(1)(/); see also
Nev. Const. art. 4, § 30 (stating that "[a] homestead as provided by law,
shall be exempt from forced sale under any process of law").
Nevada law requires that a debtor must reside on real property in order to
exempt that property as a homestead
Because the Nevada bankruptcy exemption provisions do not
define "homestead," but instead refer to the "homestead as provided for by
"The word allodial is defined as "[h]eld in absolute ownership."
Black's Law Dictionary 88 (9th ed. 2009).
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law," we turn to Chapter 115 of the Nevada Revised Statutes, which
governs homesteads in this state. Savage, 123 Nev. at 90-91, 157 P.3d at
700. As relevant here, NRS 115.005(2)(a) defines a homestead as property
consisting of "[a] quantity of land, together with the dwelling house
thereon. . . to be selected by the husband and wife, or either of them, or a
single person claiming the homestead." Thus, the statutory definition of
"homestead" does not expressly state whether a party must reside on his
or her homestead. 2 It does, however, require that the property "be
selected" as a homestead by the party or parties. This requirement is
governed by NRS 115.020, which provides that "[t]he selection must be
made by either the husband or wife, or both of them, or the single person,
declaring an intention in writing to claim the property as a homestead."
NRS 115.020(1).
When married persons select their homestead by declaration,
the declaration must state that they are married and that one or both of
them are, "at the time of making the declaration, residing with their
family. . . on the premises." NRS 115.020(2)(a)-(b). Although the statute
does not require that a single person declaring an intention to claim a
property as a homestead must declare that he or she resides on the
2 However, the Legislature's use of the term "dwelling house"
suggests an intent that the party must reside on his or her homestead.
See Black's Law Dictionary 582 (9th ed. 2009) (defining dwelling house as
"[t]he house or other structure in which a person lives; a residence or
abode"); see also Smart v. State, 190 N.E.2d 650, 651-52 (Ind. 1963)
(holding that a rural summer cottage was not a dwelling house within the
meaning of Indiana's burglary statute because it was not the owners'
primary residence and the owners only "spent a two or three weeks'
vacation and weekends there").
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property, it does require such a person to specify that "he or she is a
householder." NRS 115.020(2)(a). This court has defined the term
householder as "one who keeps house," further stating that a householder
"must be in actual possession of the house" and must be "the occupier of a
house." Goldfield Mohawk Mining Co. v. Frances Mohawk Mining &
-
Leasing Co., 31 Nev. 348, 354, 102 P. 963, 965 (1909). Therefore, based on
the language of NRS 115.020(2)(a), a single person declaring an intention
to claim a property as a homestead must be "in actual possession of the
house." Id.
In addition to declaring his or her residence or householder
status, any claimant selecting property as his or her homestead must state
"that it is their or his or her intention to use and claim the property as a
homestead." NRS 115.020(2)(c). David argues that under NRS
115.020(2)(c), a single person, as "any claimant," may file a declaration of
homestead for a parcel of real property that he does not reside on because
this subsection does not contain its own residency or householder
requirement. But this reading of the homesteading statutes ignores the
requirement in NRS 115.020(2)(a) that single individuals selecting a
homestead must declare that they are householders. Thus, based on the
language of the statute, we conclude that in order to select property as a
homestead, an individual must reside on that property. See NRS
115.020(2)(a); Goldfield Mohawk Mining Co., 31 Nev. at 354, 102 P. at
965.
David may not exempt the Reno property as a homestead under the
doctrine of constructive occupancy
David argues that he should be able to claim constructive
occupancy of the Reno property because he originally resided on the
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property and only moved because of the divorce. Further, he argues that
he should be able to claim constructive occupancy in order to protect his
children who still reside on the property. David cites a number of cases
from other jurisdictions in support of his proposition that he can claim
constructive occupancy. See In re Thomas, 27 B.R. 367, 370-71 (Bankr.
S.D.N.Y. 1983) (finding that a debtor driven from her residence by
domestic violence may still claim an exemption in the home); see also
Beltran v. Kalb, 63 So. 3d 783, 787 (Fla. Dist. Ct. App. 2011) (applying
Florida's constitutional provision that allows homestead exemptions for
"the residence of the owner or the owner's family," thus ruling that an
owner of a house may claim a homestead as long as his family resides
there). 3 We do not find these cases persuasive.
In Nevada, lilt is axiomatic there can not be a homestead
absent residence[,] . . . when a declaration of homestead is filed the
declarant must be residing on the premises with the intent to use and
claim the property as a homestead." In re Sullivan, 200 B.R. 682, 685
(Bankr. D Nev. 1996), affd,$) 163 F.3d 607 (9th Cir. 1998). While the
OSC
3 David's reliance on these cases is misplaced because they are
distinguishable from this situation for a number of reasons. First, many
deal with situations in which a debtor spouse left the marital residence
but was still awaiting final resolution of the pending divorce—thus each
spouse's possessory right to the property had yet to be determined. See In
re Moulterie, 398 B.R. 501, 505 (Bankr. E.D.N.Y. 2008). In these
situations, many courts have found that the debtor spouse was entitled to
a homestead because the possessory right to the preexisting homestead
was not yet finalized in state court. Id. That is not the case here.
Additionally, several of the cited cases apply homestead statutes that
allow for a much more liberal scrutiny of the homestead residence
requirement. See Beltran, 63 So. 3d at 787.
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statutory provisions relating to homesteads should be liberally construed,
this liberal interpretation "can be applied only where there is a
substantial compliance with [the homestead] provisions." McGill, 61 Nev.
at 40, 116 P.2d at 583; see Maxwell v. State Indus. Ins. Sys., 109 Nev. 327,
330, 849 P.2d 267, 269 (1993) ("Where the language of the statute is plain
and unambiguous [J . . . a court should not add to or alter [the language] to
accomplish a purpose not on the face of the statute . . . ." (internal
quotation marks omitted)).
We conclude that under NRS 115.020(2), a homestead
declaration must concern the claimant's "bona fide residence." See
Jackman, 109 Nev. at 721, 857 P.2d at 10 (concluding that a building used
partly as a business could be claimed as a homestead, so long as the
property remained the family's "bona fide residence"); McGill, 61 Nev. at
39-40, 116 P.2d at 583 (requiring proof of actual bona fide residence at the
time the homestead declaration is filed). As such, we conclude that David
may not validly file a homestead declaration on the Reno property because
it was not his bona fide residence, and we decline David's invitation to
extend Nevada homestead law based on constructive occupancy. 4
We therefore conclude that a debtor must actually reside on
4We note that David may still be able to file a homestead declaration
after he filed his bankruptcy petition, since we have held that a
declaration may be filed at any time before the actual sale under
execution. See Myers v. Matley, 318 U.S. 622, 627-28 (1943); In re Zohner,
156 B.R. 288, 290 (Bankr. D. Nev. 1993); Massey-Ferguson, Inc. v.
Childress, 89 Nev. 272, 272, 510 P.2d 1358, 1358 (1973). However, such a
declaration would still be invalid due to the fact that the Reno property is
not David's bona fide residence.
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real property in order to properly claim a homestead exemption for that
property. 5
Gibbons
We concur:
1 h 4.
Pickering
, C.J.
J.
Hardesty
Parraguirre
Douglas
J.
J.
Saitta
5 We
have considered the parties' remaining arguments and conclude
that they are without merit.
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