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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37971
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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My wife and I filed a chapter 11 bankruptcy in California --

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My wife and I filed a chapter 11 bankruptcy in California -- we claimed a homestead exemption of $100,000 -- during the chapter 11 case we sold our personal residence -- we then (within 60 days of closing escrow) signed a contract to buy a parcel of land and a contract with a building contractor to have our new home built -- we also signed a new mortgage contract to finance the construction cost of the new home -- and we stated in the loan application that the money would be used for the construction of a home that we intended to live in as our principal residence -- then we converted our case to a chapter 7 -- we put the total amount (94,000) of money received from the sale of our home towards the land purchase and the building contract -- the chapter 7 trustee now says that the homestead proceeds are his because we did not reinvest the money in a new "dwelling" within 6 months of the sale date of our prior homesteaded residence -- is he entitled to the money? Thank you
Hello,

The trustee is, unfortunately, correct.

In the case of In re Jacobson (9th Cir. 2012) 676 F3d 1193, 1200, the federal Ninth Circuit court of appeal confirmed that a debtor who does not timely reinvest the proceeds of the sale of a homestead dwelling within the period prescribed by state law, loses the exemption. In California, that period is six months from the date of sale of the homestead property. CCP 704.720(b); 704.960(a).

I'm sorry that the news here is not better, but under the circumstances, the best I can do is to recite the law, so that you know what you're up against. Maybe there are other facts that would mitigate against the trustee's seizure of the proceeds of sale. That would be something to discuss with local bankruptcy counsel.

Hope this helps.
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