As reported in WestlawNext, Debtors’ sailboat qualifies for homestead exemption (Bkrtcy.E.D.La.)
(August 26, 2015) – A Louisiana couple who live full time on a sailboat that is moored at a marina can claim a homestead exemption on the vessel in their Chapter 7 bankruptcy, a bankruptcy judge has ruled in resolving an issue of first impression in the state.
The boat serves as the couple’s primary residence as contemplated under Louisiana exemption law, U.S. Bankruptcy Judge Jerry A. Brown of the Eastern District of Louisiana said, denying the bankruptcy trustee’s motion to disallow the exemption.
Kevin and Betty Housh filed for Chapter 7 relief in March 2015, claiming a homestead exemption on their 34-foot sailboat under La. Rev. Stat. Ann. § 20:1.
In May the Chapter 7 trustee filed a motion to disallow the exemption claim and seek surrender of the boat, saying moveable vessels are not eligible for Louisiana’s homestead exemption.
In support of their claim, the Houshes said the vessel has been moored at a Mandeville, Louisiana, marina since September 2011, that they have a utility account and receive mail at the marina, and that they intend to maintain their residency on the boat indefinitely.
Debtors use boat as homestead
Section 20:1 defines a homestead as “a residence occupied by the owner and the land on which the residence is located.”
Judge Brown noted that the statute does not specify the manner of dwelling nor does it require the residence to be permanently affixed to the land.
He also cited Article 7, Section 20(A)(1) of the Louisiana Constitution, which includes mobile homes within the state’s homestead definition regardless of whether the homeowner also owns the land on which it sits.
While Judge Brown found no Louisiana cases applying the homestead exemption to a vessel, he pointed to examples from neighboring states allowing debtors to exempt houseboats and other vessels used as primary residences.
“Comparing the relevant facts to the cases above, it is evident that the facts of this case support the debtor’s position that their vessel should be entitled to the homestead exemption,” he said, citing In Re Scudder, 97 B.R. 617 (Bankr. S.D. Ala. 1989), and In Re Mead, 255 B.R. 80 (Bankr. S.D. Fla. 2000).
“As in Scudder, the debtors’ vessel is equipped for onboard living,” the judge said.
The Mead court found that leasing a boat slip at a marina was the same as renting land for placement of a mobile home, he said, noting the Houshes’ electric, water, sewage and cable connections at their slip.
Finally, Judge Brown noted the Houshes’ unchallenged claim that they maintained no other residence.
“It is clear that the vessel serves as the debtors’ ‘primary residence'” under Section 20(A)(1), the judge concluded, denying the trustee’s motion.
By Michael Nordskog