Opinion ID: 491755
Heading Depth: 1
Heading Rank: 4

Heading: Substantive Rights Under NEJA

Text: 17 The debtors essentially contend that Article 5 incorporated the Article 4 exemption by reference so that their declaration of homestead entitled them to all of the benefits of Article 4. REPCA, on the other hand, argues that NEJA changed the law of declared homesteads so that a declaration only provides for benefits in addition to those conferred by Article 4. After a careful analysis of the statute, we conclude that REPCA is correct. Article 4 protects the homestead from forced sale without prior court order. Cal.Civ.Proc.Code Sec. 704.740(a). Article 5 provides additional benefits for debtors who file a declaration of homestead. Proceeds from voluntary sale are protected. Cal.Civ.Proc.Code Sec. 704.960. Judgment liens do not attach to the equity protected by the declared homestead exemption. Cal.Civ.Proc.Code Sec. 704.950. And protection of the declared homestead against attachment of judgment liens survives the deceased homestead owner. Cal.Civ.Proc.Code Sec. 704.995. 18 As a starting point, we note that under NEJA, the effect of a declaration of homestead recorded under former law is limited to the effect given the homestead by Article 5. Cal.Civ.Proc.Code Sec. 694.090. Statements in legislative commitee reports which are in accord with a reasonable interpretation of a statute will be followed by courts to assist in interpretation of legislative intent. Wolfe v. Lipsy, 163 Cal.App.3d 633, 642, n. 2, 209 Cal.Rptr. 801, 807, n. 2 (1985). In connection with Article 5, the Senate Legislative Committee commented: 19 [T]he effect of a declaration of homestead recorded under former law is limited to the effect given the homestead declaration by this article [Article 5].... Other effects of a declaration of homestead under former law are not continued. See Section 694.090. 20 Legislative Committee Comment--Senate, 1982 Addition to Article 5 (emphasis added). 21 Under Article 5, a judgment lien does not attach to the declared homestead, except to the extent the debtor has equity over and above the homestead exemption defined in Article 4. Section 704.950 provides: 22 (a) Except as otherwise provided in subdivisions (b) and (c), a judgment lien on real property created pursuant to Article 2 (commencing with Section 697.310) of Chapter 2 does not attach to a declared homestead if both of the following requirements are satisfied: 23 (1) A homestead declaration describing the declared homestead was recorded prior to the time the abstract or certified copy of the judgment was recorded to create the judgment lien. 24 (2) The homestead declaration names the judgment debtor or spouse of the judgment debtor as a declared homestead owner. 25 (b) This section does not apply to a judgment lien created under Section 697.320 by recording a certified copy of a judgment for child or spousal support. 26 (c) A judgment lien attaches to a declared homestead in the amount of any surplus over the total of the following: 27 (1) All liens and encumbrances on the declared homestead at the time the abstract of judgment or certified copy of the judgment is recorded to create the judgment lien. 28 (2) The homestead exemption set forth in Section 704.730. 29 (Emphasis added.) The debtors point to this section as the source of their homestead exemption in bankruptcy, contending that the reference to Section 704.730 incorporates all of the benefits of Article 4 for houses protected by a declaration of homestead. We disagree. 30 Section 704.730 merely states the amount of the homestead available under Article 4. By its terms the section neither confers benefits on homeowners nor sets forth requirements for entitlement to the automatic dwelling exemption. 1 Thus, the recording of a declaration of homestead of a judgment debtor does not mean that the debtor is automatically entitled to the homestead exemption set forth in Cal.Civ.Proc.Code Sec. 704.730. In a state court proceeding for levy and execution, the creditor must submit an application for an order for sale. Cal.Civ.Proc.Code Sec. 704.750. This application must state the amount of the homestead exemption. Cal.Civ.Proc.Code Sec. 704.760. The debtor must then provide that he is entitled to a greater amount than that stated in the application. In attempting to meet this burden, the debtor will have to demonstrate that the dwelling falls within the definition of the homestead set forth in Cal.Civ.Proc.Code Sec. 704.710(c). See Frandzel & Kaplan, The Enforcement of Judgments Law--One Year After Its Effective Date, Part 5: Practical Considerations in Executing on Dwellings, 5.6, p. 37 (Calif.Cont.Ed.1984). The language of Article 5 indicates that it does not protect the homestead against levy and execution: 31 Whether or not a homestead declaration has been recorded: (a) Nothing in this article affects the right of levy pursuant to a writ of execution. (b) Any levy pursuant to a writ of execution on a dwelling (as defined in Section 704.710) and the sale pursuant thereto shall be made in compliance with Article 4 (commencing with Section 704.710) and the judgment debtor and the judgment creditor shall have all the rights and benefits provided by that article. 32 Calif.Civ.Proc.Code Sec. 704.970. The legislative comment to this section even notes that Section 704.970 makes clear that the homestead declaration does not affect the right of a judgment creditor to levy on the declared homestead pursuant to a writ of execution. 2 33 The reference to Sec. 704.730 in Sec. 704.950 does not, as the debtors contend, incorporate all of the benefits in Article 4 into Article 5. Rather, the reference is the short hand method chosen by the legislature to give added protection to the Article 4 dwelling exemption by further exempting it from judicial liens. We are mindful of the California authorities which admonish that the homestead statutes are to be construed liberally on behalf of the homesteader. Ingebretsen v. McNamer, 137 Cal.App.3d 957, 960, 187 Cal.Rptr. 529, 530 (1982). See also Swearingen v. Byrne, 67 Cal.App.3d 580, 584, 136 Cal.Rptr. 736 (1977); San Diego White Truck Company v. Swift, 96 Cal.App.3d 88, 94, 157 Cal.Rptr. 745, 748 (1979) (The broadest application of the homestead exemption statute is necessary to accomplish the benevolent purpose of the statute.) But liberal construction in favor of the debtor does not give us license to rewrite the California legislature's scheme for homestead protection. We are compelled by the statutory language and legislative history to conclude these debtors are not entitled to exemption on their Mendocino house based solely on their recorded declaration of homestead.