Nealon v. Matthews

Christian Nealon v. Theresa Mathews (In re Christian Nealon) BAP NO. MW 15-035, --BR—(1st. Cir. BAP. January 20, 2016)
On a decision not for publication the BAP reversed the Bankruptcy Court’s order sustaining the objection to the homestead exemption since the Bankruptcy Court’s focus should have been on the family’s actual use of the property at the time of the declaration of homestead in 2013, not on Mr. Nealons intent to subdivide the property between 2004 and 2011. If Debtor actually occupies the property and uses the surrounding land in connection with this principal residence, his past and future intention regarding the property is not controlling.
Procedural context:
Debtor appealed from the bankruptcy court’s bench decision sustaining creditor’s objection to homestead exemption over a subdivision of his principal residence property. Debtor argues that the bankruptcy court applied the wrong standard and erroneously focused on his original intent to subdivide the property rather than his family’s actual use of the property at the time of the declaration of homestead. The BAP determined that the Nealons’ testimony and unequivocal documentary evidence demonstrated that Mr. Nealon and his family actually used and occupied the vacant lots as part of an in connection with his principal residence at the time of the declaration of homestead. Creditor, Mrs. Mathews failed to rebut that evidence.
Debtor claimed the exemption under Section 522 over the entire lot of his principal residence property purchased on 2005, even when it was subdivided in 4 lots with the intention to sell the adjacent lots during a process that took place from 2009-2011. The conditions to complete the division were not met and the family decided to keep the property and continue using the same. Even though the family prepared a Subdivision Plan of the lots, received a conditional approval from the Planning Board and recorded the proposed Subdivision Plan, they couldn’t comply with the conditions of the Planning Board since the mortgagee refused to partially release its mortgage and the Executive Office of Energy and Environmental Affairs never approved the Conservation Restriction. In December 2013, the Nealons executed a Declaration of Homestead Exemption over the entire lot. The family chapter 7 bankruptcy case was filed on April 2014. Even though the creditor rebutted the presumption in favor of Mr. Nealon, he satisfied his burden to produce unequivocal evidence to demonstrate that the exemption was proper. The creditor failed to rebut that evidence.
Deasy, Harwood, and Cary.

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