Myers v. Matley
Headline: Nevada homestead rule upheld: Court affirmed that a homeowner’s recorded homestead declaration filed before sale, even after a spouse’s bankruptcy filing, protects the home from the bankruptcy trustee and lets the resident keep the property.
Holding:
- Allows homeowners to record homestead after bankruptcy filing but before sale to protect their homes.
- Limits trustee’s power to take homes when state law lets homestead be recorded before sale.
- Applies where state law treats homestead like Nevada’s recording-before-sale rule.
Summary
Background
A bankruptcy petition was filed against a husband in October 1940. His wife lived in the couple’s Reno home and filed a homestead declaration with the county recorder in November 1940, and then claimed the home as exempt in the bankruptcy court. The bankruptcy referee denied the claim, the district court reversed, and the court of appeals affirmed the reversal. The home had been community property and the wife was living there when the bankruptcy petition was filed. A divorce later awarded the residence to the wife.
Reasoning
The Court examined whether a homestead declaration recorded after a bankruptcy petition but before any actual sale could protect the home against the trustee. It held that the 1938 amendment to §70(a) did not change the rule that state law determines whether property is presently exempt. The Court distinguished an earlier case where an exemption was ineffective because it was recorded only after a bankruptcy petition in a state whose law created no present exemption until recordation. Under Nevada’s constitution and statutes, a homestead recorded before an actual execution sale creates a present right that prevents sale. The trustee’s rights are no greater than those of a creditor with a levy, so the wife’s declaration was effective against the trustee.
Real world impact
The decision means that under Nevada law a homeowner who records the homestead before an actual sale can keep the home despite a bankruptcy filing. The ruling depends on state law and applies where state rules give the same protection before sale.
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