new-york-state florida bankruptcy
Does Florida bankruptcy law apply to second homes?
<p>A New York couple filed for bankruptcy. In New York state, they have to surrender all their assets to the bankruptcy court except for $150,000 each of "exempt" assets.</p>

<p>They own a "second" home in Florida worth about $250,000. If that was their primary residence, Florida law would cover their home to that amount (or more). But given that they lived in and filed for bankruptcy in New York, would the Florida home be part of the New York bankruptcy estate?</p>

<p><strong>Yes, the second home will be part of the New York bankruptcy estate.</strong></p>

<p>Congress <a href="http://www.gpo.gov/fdsys/pkg/USCODE-2011-title11/html/USCODE-2011-title11-chap5-subchapIII-sec541.htm" rel="nofollow">broadly defined</a> property within the bankruptcy estate as all property, "wherever located and by whomever held," subject to limited exemptions.</p>

<p>Florida's homestead exemption is among the broadest in the Unite dStates; the value of the property that can be protected is unlimited. See <a href="http://www.leg.state.fl.us/Statutes/index.cfm?Mode=Constitution&amp;Submenu=3&amp;Tab=statutes&amp;CFID=31291832&amp;CFTOKEN=5256c746d0b3ef39-97AA40EF-BC9E-596A-2233BA53E8B77232#A10S04" rel="nofollow">Florida Constitution, Article X, Section 5</a>.</p>

<p>As such, I have broken down your question into two parts:</p>

<ol>
<li><p>May the debtors use the Florida homestead exemption for their Florida home even if they are domiciled in New York?</p></li>
<li><p>If not, may the debtors use either the Federal or New York state homestead exemptions to protect their Florida home? </p></li>
</ol>

<h2>Exemption Eligibility</h2>

<p>The debtors can choose between either the federal exemptions of section 522(d) or the exemptions available under New York state and nonbankruptcy federal law; the debtors may <em>not</em> choose the exemptions available under Florida state law.</p>

<p>Section 552 of the Bankruptcy Code is the operative statute. To take advantage of a state's exemption scheme, the debtor must either:</p>

<ul>
<li>Be domiciled in the state for the 730 days immediately prior to filing its petition; <em>or</em></li>
<li>If the debtor has not been domiciled in a single state for such period, the state in which the debtor was domiciled for the 180 days immediately preceding the 730-day period (or for the longer portion of that 180 day period).</li>
</ul>

<p><a href="http://www.gpo.gov/fdsys/pkg/USCODE-2011-title11/html/USCODE-2011-title11-chap5-subchapII-sec522.htm" rel="nofollow">11 U.S.C. § 522(b)(1)(A)</a>:</p>

<blockquote>
  <p>. . . any property that is exempt under Federal law . . . or State or local law that is applicable on the date of the filing of the petition to the place in which the <strong><em>debtor’s domicile has been located for the 730 days immediately preceding the date of the filing of the petition</em></strong> or if the debtor’s domicile has not been located in a single State for such 730-day period, the place in which the debtor’s domicile was located for 180 days immediately preceding the 730-day period or for a longer portion of such 180-day period than in any other place;</p>
</blockquote>

<p>As a result, the debtor may only utilize either the Federal or New York homestead exemptions.</p>

<h2>Federal Homestead Exemption</h2>

<p><a href="http://www.gpo.gov/fdsys/pkg/USCODE-2011-title11/html/USCODE-2011-title11-chap5-subchapII-sec522.htm" rel="nofollow">Section 522(d)(1)</a> provides a homestead exemption in the amount of $22,975 in value for the debtor's residence.</p>

<blockquote>
  <p>(1)  The debtor's aggregate interest, not to exceed $ 22,975 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.</p>
</blockquote>

<p>(The linked statute says that the federal homestead exemption is capped at $15,000. But pursuant to 11 U.S.C. § 104, the amount is adjusted every three years to account for changes in the cost of living. Effective April 1, 2013, the cap is $22,975).</p>

<p>Essential to the right to a homestead exemption is designation and occupancy of the property as a residence. Residence and domicile are not necessarily the same thing. Courts seem to be split as to whether a debtor may hold multiple "residences" at the same time. For example, the court in  <em>In re Lawrence</em>, 469 B.R. 140 (Bankr. D. Mass. 2012) held: </p>

<blockquote>
  <p>By choosing not to limit the residence qualified for exemption under § 522(d) to a principal or primary residence, Congress presumably intended to encompass a broader category than principal residences, namely any residence . . . .</p>
  
  <p>To sum up, on the date of their bankruptcy petition the [debtors] owned two residences, one in Massachusetts and one in Maine. They used them both. They were entitled to exempt either one, but only one, under § 522(d)(1). </p>
</blockquote>

<p><em>See also In re Demeter</em>, 478 B.R. 281 (Bankr. E.D. Mich. 2012); <em>In re Gandy</em>, 327 B.R. 807 (Bankr. S.D.Tex. 2005).</p>

<p>But the New Jersey Bankruptcy Court in <em>In re Stoner</em>, 487 B.R. 410 (Bankr. D.N.J. 2013) read the term "residence" in a manner "requiring some measure of permanence."</p>

<p>I couldn't find any cases from New York discussing this issue, making it difficult to determine whether a New York bankruptcy court would allow the debtors to apply the federal homestead exemption to their Florida home. But given that the exemption is capped at only $22,975, it is unlikely to have a significant impact on the bankruptcy. </p>

<h2>New York Homestead Exemption</h2>

<p>The New York homestead exemption is more generous than the federal exemption. It provides  exemptions capped between $75,000 to $150,000. However, it is limited to property located within New York and used as a primary residence. As such, the Florida property is not subject to the exemption.</p>

<p><a href="http://Civil%20Practice%20Law%20and%20Rules" rel="nofollow">New York Civil Practice Law and Rules § 5206</a>:</p>

<blockquote>
  <p>Property  of  one  of  the
    following  types,  not  exceeding one hundred fifty thousand dollars for
    the counties of  Kings,  Queens,  New  York,  Bronx,  Richmond,  Nassau,
    Suffolk,  Rockland,  Westchester  and  Putnam;  one  hundred twenty-five
    thousand dollars for the counties of Dutchess, Albany, Columbia, Orange,
    Saratoga and Ulster; and seventy-five thousand dollars for the remaining
    counties of the state in value above liens and encumbrances,  owned  and
    occupied  as  a  principal  residence, is exempt from application to the
    satisfaction of a money judgment,  unless  the  judgment  was  recovered
    wholly for the purchase price thereof:</p>
  
  <ol>
  <li><p>a lot of land with a dwelling thereon,</p></li>
  <li><p>shares of stock in a cooperative apartment corporation,</p></li>
  <li><p>units of a condominium apartment, or</p></li>
  <li><p>a mobile home.</p></li>
  </ol>
</blockquote>
