BILL ANALYSIS
SB 433
Page 1
Date of Hearing: July 3, 2007
ASSEMBLY COMMITTEE ON JUDICIARY
Dave Jones, Chair
SB 433 (Harman) - As Amended: April 10, 2007
PROPOSED CONSENT
SENATE VOTE : 36-0
SUBJECT : HOMESTEAD EXEMPTIONS
KEY ISSUE : SHOULD A SPOUSE IN A DIVORCE PROCEEDING BE ALLOWED
TO RETAIN A RIGHT TO AUTOMATIC HOMESTEAD EXEMPTION, UNTIL ENTRY
OF JUDGMENT DIVIDING THE COMMUNITY PROPERTY, REGARDLESS OF
WHETHER OR NOT HE OR SHE IS LIVING IN THE HOUSE?
SYNOPSIS
This non-controversial bill, sponsored by the Conference of
Delegates of California Bar Associations, entitles a judgment
debtor, not currently residing in the homestead, to an automatic
homestead exemption if their former spouse continues to reside
in the home. According to the author, when spouses decide to
either separate, or to seek a divorce, one spouse often moves
out, while the other continues to reside in the family
residence. Pursuant to Section 704.710 of the Code of Civil
Procedure, the automatic homestead exemption only applies when
the judgment debtor, or spouse, has continuously resided in the
dwelling from the time of attachment of the creditor's lien to
the court determination that the dwelling is a homestead. The
Conference of Delegates states that it is unfair to the spouse
that is not residing in the property to have their homestead
rights terminated even though they continue to have a community
property ownership interest in the dwelling. Aside from
addressing the issue of fairness, this bill also addresses the
issue of safety: Current law is obviously unfair to a judgment
debtor spouse who has vacated the property in order to avoid
physical abuse perpetrated by the spouse remaining in the family
home. A victim of domestic violence should not be penalized for
leaving the homestead for self-preservation, and this bill seeks
to provide a reasonable solution. The bill has no known
opposition.
SUMMARY : Entitles a judgment debtor, not currently residing in
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the homestead, to an automatic homestead exemption if their
former spouse continues to reside in the home. Specifically,
this bill :
1)Provides that a judgment debtor, not currently residing in the
homestead, is entitled to an automatic homestead exemption if
their separated or former spouse continues to reside and
exercise control over possession of the homestead.
2)Provides that entitlement ends upon the entry of judgment or
other legally enforceable agreement dividing the community
property between the judgment debtor and the separated or
former spouse, or as specified by court order.
3)Specifies that nothing in this bill shall entitle the judgment
debtor to more than one exempt homestead.
4)Provides "spouse" may include a separated or former spouse as
specified.
EXISTING LAW :
1)Requires the Legislature to protect, by law, a certain portion
of the homestead and other property, from forced sale.
(California Constitution, Article XX, Section 1.5.)
2)Provides both an automatic and a declared homestead exemption
that serve to protect a portion of equity in a debtor's home
from creditors. (Code of Civil Procedure Sections 704.710 et
seq., 704.910 et seq.)
3)Provides that the automatic homestead exemption applies to the
principal dwelling in which the judgment debtor, or spouse,
continuously resided from the date of attachment of the
judgment creditor's lien until a court determination that the
dwelling is a homestead. (Code of Civil Procedure Section
704.710.)
4)Protects dwellings that qualify under the automatic homestead
exemption by:
a) Exempting them from a court ordered sale, provided that
criteria relating to the amount received are not met; and,
b) Exempting proceeds of a forced lien sale, or the value
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received from damage, destruction, or acquisition for
public use, in the amount of the homestead exemption.
(Code of Civil Procedure Sections 704.720; 704.800.)
5)Provides that if the judgment debtor and their spouse reside
in separate homesteads, only one of the homesteads is exempt.
(Code of Civil Procedure Section 704.720(c).)
6)Provides that "spouse" does not include a married person upon
an entry of judgment of legal separation, unless those persons
reside in the same dwelling. (Code of Civil Procedure Section
704.710.)
FISCAL EFFECT : As currently in print, this bill is keyed
non-fiscal.
COMMENTS : This non-controversial bill entitles a judgment
debtor, not currently residing in the homestead, to an automatic
homestead exemption if their former spouse continues to reside
in the home. According to the author, when spouses decide to
either separate, or to seek a divorce, one spouse often moves
out, while the other continues to reside in the family
residence. Pursuant to Code of Civil Procedure section 704.710,
the automatic homestead exemption only applies when the judgment
debtor, or spouse, has continuously resided in the dwelling from
the time of attachment of the creditor's lien to the court
determination that the dwelling is a homestead. The sponsors,
the Conference of Delegates of the California Bar Associations,
state that it is unfair to the spouse that is not residing in
the property to have their homestead rights terminated even
though they continue to have a community property ownership
interest in the dwelling. This result is particularly unfair
where the judgment debtor has vacated the property in order to
avoid physical abuse. This bill has no known opposition.
Homestead Exemptions . Under current law, the Legislature is
required to protect a portion of a homestead, and other select
property, from forced sale. (California Constitution, Article
XX, Section 1.5.) The policy underlying the California
homestead exemption is to protect property from existing debts
and to prevent creditors from taking all property belonging to a
judgment debtor in order to satisfy creditors' claims. (Yager
v. Yager, 7 Cal. 2d 213, 217 (1936).) "'The broad purpose of
the homestead laws is to promote the security of the home, and
to place such property beyond the reach of the consequences of
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the homeowner's economic misfortune.'" (Swearingen v. Byrne, 67
Cal. App. 3d 580 (1977).) Existing law provides that a person
may protect a specified portion of the value of their principal
dwelling from being sold pursuant to a court order to satisfy a
debt to creditors. If the dwelling cannot be sold for an amount
that exceeds the exemption (plus liens and encumbrances on the
property itself), it may not be sold to satisfy the judgment.
The homestead exemption, under current law, requires either the
judgment debtor or the spouse to reside in the dwelling on the
date of the attachment of the lien, and to continuously reside
thereafter until a court determination that the dwelling is a
homestead.
Extension of Exemption Protects Victims of Spousal Abuse . Under
current law, for a recently separated or divorced judgment
debtor to retain their automatic homestead exemption, that
debtor must continue to reside in the dwelling until a court
determines that the dwelling is a homestead. (Code of Civil
Procedure Section 704.710(c).) This leads to unfair results if
a victim of domestic abuse decides to seek a divorce and move
out of the family residence to distance themselves from the
abuser. As a result of this decision, under current law, that
victim may lose his or her homestead exemption upon the
dissolving of the marriage. The author notes that such a result
is "particularly unfair," when the individual still retains a
community interest in the dwelling.
REGISTERED SUPPORT / OPPOSITION :
Support
Conference of Delegates of the California Bar Associations
Opposition
None on file
Analysis Prepared by : Manuel Valencia / JUD. / (916) 319-2334