Nevada Supreme Court Limits Homestead Exemption in In re Nilsson

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In In re Nilsson, 129 Nev. Adv. 101 (December 26, 2013), the United States Bankruptcy Court for the District of Nevada certified the following question to the Nevada Supreme Court:

Can a debtor properly claim a homestead exemption for his interest in real property under NRS 21.090(1)(l) and NRS Chapter 115 when the debtor himself does not reside on the property but his minor children do? Put another way, does a debtor have to actually reside on the property that is the subject of a claimed homestead exemption under NRS 21.090(1)(l) and NRS Chapter 115, or is it sufficient that a debtor’s minor children reside on the property in order to qualify for the exemption?
                     
In Nilsson, the debtor and his ex-wife jointly owned a house in Reno, Nevada that she and their children lived in. The debtor ultimately claimed in his bankruptcy that the home was exempt under Nevada’s homestead exemption “in order to protect his interest in the Reno property for the benefit of his children” and argued that his prior occupancy of the property and his children’s present occupancy of the property are “constructive occupancy” of the property by him. The bankruptcy trustee objected to the exemption because the debtor did not reside on the property.

The Nevada Supreme Court rejected the claimed exemption. When doing so, it interpreted NRS 115.005(2)(a), which defines a homestead as “[a] quantity of land, together with the dwelling house thereon … to be selected by the husband and wife, or either of them, or a single person claiming the homestead,” to require that “an individual must reside on that property” in order to claim that it is exempt. The Nevada Supreme Court also rejected the debtor’s allegations that he constructively occupied the property.