Las Vegas Bankruptcy Lawyers Look for Changes in Homestead Law
According to the information presented in this Las Vegas Review Journal article, Las Vegas bankruptcy lawyers should be aware of the assumption that homestead claims must reflect a primary residence. The Homestead Acts of the 19th and 20th centuries were designed to promote the settlement and population of remote areas of the U.S. like the Mountain West, including Nevada, Utah, Alaska and other areas. These acts gave applicants ownership of land at virtually no cost in exchange for settling and cultivating an area. The Federal Land Policy and Management Act of 1976 put an end to homesteading, however, so the government could retain control of western public lands (although Alaska’s homesteading didn’t end until 1986). In basic terms this meant, you could move somewhere, establish a residence and receive a deed to the property you demarcated as yours. Sounds great, and for many pioneering Americans, it was.
Now, homesteading law works differently, as many Las Vegas bankruptcy lawyers can attest. The Clark County government website outlines what the current Nevada Homestead Law means for homeowners here. Essentially, instead of giving settlers free land, current homestead law provides that homeowners can record a “Declaration of Homestead,” in order to protect the equity in a home (up to $550,000) from general creditor claims in bankruptcy. Las Vegas bankruptcy lawyers should know, however, if the house is worth more than half a million, the Homestead Law does not preclude the forced sale or seizure, nor does it preclude against debts secured by a mortgage or deed of trust, payment of taxes, IRS lien, mechanic’s lien, child support or alimony payments.
So why all the current fuss? Now, when declaring bankruptcy, the debtor must actually live in the home to claim Nevada’s homestead protection, according to a Supreme Court ruling issued Thursday. In doing their homework, a Las Vegas bankruptcy lawyer would discover that even homes owned jointly with another party are not protected if the party filing for bankruptcy does not make that home their permanent residence. In the case cited by the Las Vegas Review Journal Article, each party holds one-half interest in the property. But with the non-resident filing for bankruptcy, the other half of the party (the ex-spouse) cannot receive protection on their current residence, even though they party recorded the declaration of homestead. This ex-couple is finding their situation pretty sticky, according to their bankruptcy lawyer, who postulates the current resident would not receive homestead protection on her personal residence (of which she owns half) from the bankruptcy of her ex-husband.
This ruling was a 7-0 opinion in the Supreme Court, making the case seem pretty cut and dry, but the Las Vegas bankruptcy lawyer objected, and a federal judge has referred the question to the Nevada Supreme Court for clarification. Nevada home ownership can be complicated for people in various situations, the Las Vegas Review Journal reports, and not just those in need of a Las Vegas bankruptcy lawyer. Incarcerated owners have possession by inheritance, change of address by emergency decree, or other types of inheritance among siblings who declare bankruptcy or otherwise wish to sell the property. In these complicated cases, securing the assistance of a Las Vegas bankruptcy lawyer or real estate attorney would be a wise choice.