$150K Homestead Exemption From Forced Sale Remains Intact For California Homeowner Retaining Possession Of Premises Despite Title Transfer To Another

A California Court of Appeals addressing several legal issues relating to a judgment creditor's attempt to snatch away a judgment debtor's home through a forced sale decided, among other things, that the debtor is entitled to shelter $150,000 of equity from the creditor pursuant to the state's homestead exemption laws, despite the fact that she transferred the legal title to another. The court essentially ruled that, given the facts and circumstances of this case, despite a title transfer by Larnise Tarlesson of her home to her cousin Peola Lane (in a failed attempt to have Peola assist in refinancing the home), the continuous use thereof by Larnisse both before and after said transfer was enough to entitle her to the continued protection of the exemption.

For the ruling, see Tarlesson v. Broadway Foreclosure Investments, LLC, No. A125445 (Ct. of App., 1st Dist. Div. 3, May 17, 2010) (Certified for Publication).

(1) In affirming a lower court ruling, the appeals court stated (bold text is my emphasis, not in the original text):

• Several California cases recognize that judgment debtors who continuously reside in their dwellings retain a sufficient equitable interest in the property to claim a homestead exemption even when they have conveyed title to another. (Breeden v. Smith (1953) 120 Cal.App.2d 62, 66; Putnam Sand & Gravel Co., Inc. v. Albers (1971) 14 Cal.App.3d 722, 726; Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 81.) Such a result is consistent with the purpose of California's homestead exemption to protect one's dwelling against creditors. (Amin v. Khazindar, supra, 112 Cal.App.4th at p. 588; accord, Wells Fargo Financial Leasing, Inc. v. D & M Cabinets, supra, 177 Cal.App.4th at p. 67.)

• Broadway does not dispute that the property was Tarlesson's principal residence when it acquired its judgment lien. Nor does it dispute that she has continuously resided in the home since 1984, and there is no evidence that rebuts Tarlesson's claim that, "At all times I retained the beneficial interest in my home, which was acknowledged by Peola [Lane]."

• In the circumstances, Tarlesson's continuous occupancy of her home qualifies it as her "homestead" under section 704.710, subdivision (c). We will not also read a requirement into sections 703.020 or 704.710 that Tarlesson must have held continuous title to her home to claim the homestead exemption.