Last Part of Oregon Homestead Exemption

[GrantH]

Hello. Can someone please explain exactly what the last part of this means:

18.395 & 18.402 - Real property you occupy or intend to occupy to $40,000 ($50,000 if joint owners). Property may not exceed 1 block in a city or town, or 160 acres elsewhere. Sale proceeds exempt 1 year if plan to purchase another home.

This doesn't mean that if your house is sold by the trustee in a Chapter 7, and he pays you the exemption amount, it's ONLY exempt if you roll it into another house within one year, does it?

Thanks in advance.

Grant

[justbroke]

The actual law in O.R.S. reads

O.R.S. § 18.395 (2) The exemption shall extend to the proceeds derived from such sale to an amount not exceeding $40,000 or $50,000, whichever amount is applicable under subsection (1) of this section, if the proceeds are held for a period not exceeding one year and held with the intention to procure another homestead therewith.

There's a pretty good case here. This was In Re Winn, Bnkr. D. of Oregon, 04-69352-aer7 where the Trustee tried to claw back, a year after filing, this exemption based on the husband and wife "renting". The Trustee lost the case.

Now, if the Trustee sells the house and you claimed the exemption, then you would be entitled to the exemption! It's all about claiming the exemption.

[GrantH]

Thanks for the reply.

So I am right, yes? If the trustee sells our house, and we get $50k for our equity, we MUST reinvest that $50k into another house (or possibly pay rent with it, but I'm not interested in that question right now) within a year or the $50k is no longer exempt? IOW, we can't just keep the $50k in the bank for 5 years as a security blanket or spend it on auto repairs or my child's education or something like that, correct?

[justbroke]

So I am right, yes? If the trustee sells our house, and we get $50k for our equity, we MUST reinvest that $50k into another house (or possibly pay rent with it, but I'm not interested in that question right now) within a year or the $50k is no longer exempt? IOW, we can't just keep the $50k in the bank for 5 years as a security blanket or spend it on auto repairs or my child's education or something like that, correct?

You can't keep it. The Trustees look for this sort of thing. If you looked at the case I provided, the husband and wife had actually declared it for that purpose -- new homestead. They were lucky that they spent it on rent for the husband and a new home for the wife.

As for the Trustee, the key is that you actually EXEMPTED the home by listing the appropriate statute (above) on your Schedule C. I'm assuming that you actually have equity? Is this all just theoretical?

[GrantH]

We have significantly more equity in the house than is covered by the exemption, therefore if we file for Chapter 7, the trustee will likely sell the house and give us the $50k (from what I understand). Now I learn of the giant caveat which is, we can't KEEP the $50k unless we roll it into another house within a year. I have asked my attorney-to-be specifically about the $50k most than once just in case there WERE any caveats and he didn't mention this. Not happy.

But thanks for the info.