COUNSEL: For Debtor: Paul H. Rethier, Esq., Sound Beach, New York.
Trustee: Kenneth Kirschenbaum, Esq., Kirschenbaum & Kirschenbaum, Garden
JUDGES: Dorothy Eisenberg, United States Bankruptcy Judge.
OPINION BY: Dorothy Eisenberg
MEMORANDUM DECISION AND ORDER
Before this Court is the Chapter 7 Trustee's objection to the Debtor's claim
for a homestead exemption pursuant to N.Y. C.P.L.R. § 5206 with respect to the
Debtor's residence (the "Property") on the basis that the Debtor lacks legal
title to the Property in the form of a deed. At issue is whether the Debtor had
as of the date of this bankruptcy filing an ownership interest in the Property
for purposes of N.Y. C.P.L.R. § 5206 despite the absence of a recorded deed.
This Court has jurisdiction of this matter pursuant to 28 U.S.C. § 1334. This
contested matter is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B), and
(O), 11 U.S.C. § 552, N.Y. C.P.L.R. § 5206 and Rule 4003 of the Federal Rules of
Bankruptcy Procedure. The Court finds the Debtor's claim for a homestead
exemption to be proper and the Trustee's objection is overruled. The following
constitutes the Court's findings of fact and conclusions of law as mandated by
Rule 7052 of the Federal Rules of Bankruptcy Procedure.
On March 10, 2008, the Debtor filed a voluntary Chapter 7 petition. Kenneth
Kirschenbaum, Esq. was appointed as the Chapter 7 Trustee. Subsequent to the
bankruptcy filing, the Debtor timely filed her Schedule C to the petition, which
claimed a homestead exemption pursuant to N.Y. C.P.L.R. § 5206 (McKinney
in the sum of $ 50,000.00 with respect to the Property where she resides. In
response, the Trustee filed a timely objection to the Debtor's claim of a
homestead exemption based on his conclusion that the Debtor did not have
title to the Property (the "Objection") on May 22, 2008. A hearing on the
Trustee's Objection was held on July 15, 2008. In the period between the
Trustee's filing of an objection to the Debtor's claim for a homestead
and the hearing, the Debtor received her discharge. The Trustee and the
each submitted post-hearing memorandum of law.
STATEMENT OF FACTS
The Debtor's father died intestate in September 1978 and the Property where
the Debtor lives represents the main asset of the decedent's estate. The
and her three siblings are the heirs to her father's decedent estate. The
resided at the Property from 1963 through 1981. After the death of her
the Debtor moved back to the Property with her children in 2002 and has since
occupied it continuously as her primary residence. On December 22, 2004,
Murch, the Debtor's sister, was appointed Administrator to the decedent's
(the "Administrator"), which has not yet been settled. The last recorded deed
with respect to the Property is a Quitclaim Deed from the County of Suffolk
Darlene Murch as Administrator of the decedent's estate, dated May 10, 2005,
a result of a satisfaction of a tax lien against the Property by the
New York State has opted out of the federal exemptions as allowed pursuant to
11 U.S.C. § 522 (b) and N.Y. DEBT. & CRED. LAW § 284 (McKinney's 2001).
Therefore, New York law governs claims for exemptions relating to real and
personal property of the Debtor's bankruptcy estate.
New York law provides a homestead exemption for real property "not exceeding
fifty thousand dollars in value above liens and encumbrances, owned and
as a principal residence." N.Y. C.P.L.R. § 5206(a) (emphasis added). The
has the burden of proving that the exemption is not properly claimed. Fed.
Bankr. P. 4003(c). In order to be entitled to a homestead exemption, N.Y.
C.P.L.R. § 5206 requires evidence of two things: an ownership interest in
property and residency by the Debtor in that property.
It is undisputed that the Debtor occupies the Property as her principal
residence and did so at the time she filed for bankruptcy. The Trustee,
asserts the Debtor does not have an ownership interest in the Property
N.Y. REAL PROP. LAW § 290(3)(McKinney's 2006) requires ownership of property
be conveyed by written deed and there is no recorded deed in the Debtor's
Section 290(3) of N.Y. REAL PROP. LAW sets forth the term "conveyance" to
every written instrument, by which any estate or interest in real
property is created, transferred, mortgaged or assigned, or by which
title to any real property may be affected, including an instrument in
execution of a power, although the power to be one of revocation only,
and an instrument postponing or subordinating a mortgage lien; except
a will, a lease for a term not exceeding three years, an executory
contract for the sale or purchase of lands, and an instrument
containing a power to convey real property as the agent or attorney
for the owner of such property.
There is generally no written instrument of transfer when a distributee
an interest in real property by intestacy pursuant to N.Y. EST. POWERS &
LAW § 4-1.1 (McKinney's 1998). While N.Y. EST. POWERS & TRUSTS LAW § 1-2.15
defines "property" to be anything that may be the subject of ownership, and
real or personal property", it does not discuss the meaning of "ownership".
addition, the definition of "distributee" under N.Y. EST. POWERS & TRUSTS
1-2.5 does not hold that property vests in a distributee upon the death of an
intestate owner but only states that a "distributee is a person entitled to
or share in the property of a decedent under the statues governing descent
distribution." Accordingly, the Trustee argues that the Debtor's interest in
Property as a distributee of her father's estate is insufficient to meet the
ownership requirement of N.Y. C.P.L.R. § 5206 without a deed. The Trustee
asserts that the requirement of a deed showing an ownership interest is
consistent with New York being a "title state" for purposes of providing
to creditors and that the only way the Debtor can come into title is if and
the Administrator executes and delivers a deed to the Debtor. Accordingly,
Trustee argues that the Debtor is not entitled to a homestead exemption for
While the Court finds that the cases relied upon by the Debtor are
distinguishable, the Trustee's decision to look solely to N.Y. REAL PROP.
290 for a definition of ownership in real property is also misplaced. Bankru
courts have interpreted N.Y. C.P.L.R. § 5206 to require an ownership
the property, but not necessarily a written deed. See, e.g., In re Nye, 250
46, 49 (Bankr. W.D.N.Y 2000) (holding that New York's homestead exemption
applies to the extent of the Debtor's ownership interest in the residence).
While one court, In re de Kleinman, 172 B.R. 764, 771-72 (Bankr. S.D.N.Y.
has interpreted N.Y. C.P.L.R. § 5206 to require "good legal title" by the
for her to be entitled to a homestead exemption, this Court notes that the
in de Kleinman based its holding on an old edition of Black's Law Dictionary
defining ownership as: "[t]he complete dominion, title, or property right in
thing or claim." BLACK'S LAW DICTIONARY 1106 (6th ed. 1990)("Black's").
current edition, however, no longer defines ownership in the context of
See BLACK'S LAW DICTIONARY 1138 (8th ed. 2004). Moreover, it would be
to apply de Kleinman's unique holding here, because in de Kleinman the debtor
had no ownership interest in her condominium apartment because the
board of directors had voided her purchase of the apartment; whereas in this
case, the Debtor obtained her interest in the Property through state laws
N.Y. EST. POWERS & TRUSTS LAW is as effective as N.Y. REAL PROP. LAW and more
applicable under the facts and circumstances of this case for purposes of
determining ownership in real property. Indeed, New York state and bankruptcy
courts have found ownership in real property vests in a distributee
upon an intestate death by operation of statutory authority pursuant to N.Y.
EST. POWERS & TRUSTS LAW § 4-1.1. See, e.g., Burg v. City of Buffalo, 295
698, 702 (Bankr. W.D.N.Y. 2003) ("[T]itle to real estate upon the death of
owner vests immediately in his heirs and devisees." (quoting Kingsland v.
, 133 N.Y. 170, 174, 30 N.E. 845, 846 (N.Y. 1892))); In re Estate of Fry, 28
Misc. 2d 949, 950, 218 N.Y.S.2d 755, 757 (N.Y. Sur. Ct. 1961)("On death,
to all real property of a decedent which is not disposed of by will, vests
immediately in the distributees entitled to take under the statute."). Cf.
Kraker v. Roll, 100 A.D.2d 424, 429, 474 N.Y.S.2d 527, 531 (N.Y. App. Div.
("[V]esting by descent occurred by operation of law, irrespective of the
apparent failure to appoint an administrator or to file new deeds." (citing
Singer v. Levine, 15 Misc.2d 785, 786-87, 181 N.Y.S.2d 699, 701 (N.Y. Sup.
1958)). The law's desire to avoid any "hiatus of ownership," In re Williams'
Estate, 162 Misc. 507, 509, 295 N.Y.S. 56, 58 (N.Y. Sur. Ct. 1937), aff'd,
A.D. 741, 4 N.Y.S.2d 467 (N.Y. App. Div. 1938), goes so far as to immediately
vest ownership of property in anyone, even the State, if there is an
death without heirs. See, In re Estate of Clark, 69 Misc. 2d 498, 499, 329
N.Y.S.2d 995, 997 (N.Y. Sur. Ct. 1972) ("Upon death the title to real
never lapses but vests in someone -- distributee, specific legatee, residuary
legatee, trustee, or in the case of intestate death without heirs the
Accordingly, an ownership interest, sufficient to satisfy N.Y. C.P.L.R. §
vests in a distributee immediately upon an intestate death.
While the deed to the Property is in the name of the Administrator, under New
York law, representatives in the form of administrators or executors, receive
"possession or management" of the property strictly "for certain limited
purposes if the circumstances so require." In re Baker, 164 Misc. 92, 93, 298
N.Y.S. 261, 264 (N.Y. Sur. Ct. 1937). What rights the administrator may
as a fiduciary with respect to real property is limited to the rights set
in N.Y. EST. POWERS & TRUSTS LAW § 11-1.1. See, Singer v. Levine, 15 Misc.2d
786-87, 181 N.Y.S.2d at 701 (N.Y. Sup. Ct. 1958). While the Administrator was
not appointed until 2004 and the decedent's estate has not yet been settled,
these factors do not contradict the Debtor's receipt of an ownership interest to
the Property upon her father's death and she continues to hold an ownership
interest in the Property. Although the Trustee has alleged that the delay in
settling the estate has negatively affected at least two judgment creditors, no
evidence that these creditors exist or that the delay has adversely affected
them has been presented to this Court. In any event, whatever legal rights these
alleged judgment creditors have as secured creditors, if any, are not affected
by this decision.
In this case, as of the date of the filing of this bankruptcy petition, the
Debtor clearly had a legal ownership interest in the Property by operation of
N.Y. EST. POWERS & TRUSTS LAW § 4-1.1 as well as the required residency in the
Property pursuant to N.Y. C.P.L.R. § 5206.
Based upon the foregoing, the Debtor is entitled to claim a homestead
exemption under N.Y. C.P.L.R. § 5206 with respect to the Property. The
Objection is overruled.
Dated: Central Islip, New York
August 18 2008
/s/ Dorothy Eisenberg
United States Bankruptcy Judge