In re Breece

No. 12-8018, 2013 Bankr. LEXIS 203 (B.A.P. 6th Cir. Jan. 18, 2013)
The decision of the bankruptcy court was affirmed. The debtor cannot claim a homestead exemption pursuant to Ohio state law in a home that is owned by an LLC of which the debtor holds the sole membership interest. Based on Ohio state case law, it is unlikely that the Supreme Court of Ohio would allow a member of an LLC to claim an exemption in property owned by the LLC. Usage of the property as a residence is not paramount to other statutory elements in Ohio's homestead exemption law. Additionally, the debtor cannot claim a homestead exemption in the home because the home is not property of the debtor's estate.
Procedural context:
Appeal to the Bankruptcy Appellate Panel of the Sixth Circuit, from the United States Bankruptcy Court for the Northern District of Ohio.
The debtor (an individual) and her grandmother jointly obtained legal title to a home. The debtor and her grandmother then transferred legal title to an LLC, the membership interests of which they held. The debtor's grandmother passed away leaving the debtor as the sole remaining member of the LLC. Thereafter, the debtor filed a Chapter 7 bankruptcy petition and claimed a homestead exemption in the home pursuant to Ohio state law, Ohio Rev. Code Ann. § 2329.66(A)(1)(b). It was undisputed that the debtor used the home as her residence at all relevant times. The Chapter 7 trustee filed an objection to the homestead exemption claim, which the bankruptcy court sustained because the debtor's "sole ownership of the membership interests in the LLC would not confer upon her an 'interest' in the [home]" pursuant to Ohio's homestead exemption law. The debtor appealed to the bankruptcy appellate panel.
Fulton, McIvor, and Preston

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