Timothy L. Dailey

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
In re: 	: 	Case No. 06-54893
Timothy L. Dailey 	: 	Chapter 7
Debtor(s) 	: 	Judge Preston
ORDER DENYING AMENDED MOTIONS TO AVOID LIEN
This cause came on for consideration upon the Amended Motions to Avoid Liens of
Carla Garrett (Doc. #60), Gerald Parker, Jr. and Julie Parker (Doc. # 61), Randy Garrett (Doc. #
62), Jeff McCalla and Jennifer McCalla (Doc. #63), Laura Uhrig and David Uhrig (Doc. # 64),
Tim Hartsock and Patricia Hartsock (Doc. #65), Randy Detillion and Cynthia Detillion (Doc.
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: February 15, 2007
____________________________________________________________
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#66), Mike Secoy and Wesley Bowles (Doc. #67), Jeff Lehmar and Lisa Wrights (Doc. #68), and
Jeff Walters and Twilla Walters (Doc. # 69) filed by the Debtor Timothy L. Dailey. 	The Debtor
seeks to avoid the described judgment liens on certain real estate which he asserts is subject to
the homestead exemption under Ohio law.
At a hearing held on January 30, 2007, the Court heard testimony from the Debtor
regarding his intentions to establish homestead on property located at 34 Wisteria Way,
Chillicothe, Ohio 4560l (hereinafter called “the Property”). Having considered the Motions, the
evidence presented and being otherwise duly advised, the Court finds and concludes as follows:
The Debtor currently resides at 410 S. Market Street, Waverly, Ohio. From the Fall of
2001 through Spring of 2005, the Debtor lived in a home located at 625 Oneida Road,
Chillicothe, Ohio, with his wife and son. Planning for their future, in mid-2005 they purchased
the Property on Wisteria Way in contemplation of building a larger home. The Debtor was then
and still is employed by the school district in Chillicothe, where he has worked for
approximately 13 years. They thought the Property well suited for them because it is in the
school district, it is situated near a local bike path giving them easy access to much of the town,
and they liked the area and location. Believing they could save money by moving to a rental unit
owned by a relative, which was offered to them rent free, the Debtor and his wife sold their
home and moved to Waverly.
The Debtor’s initial plan was to save money for a few years and then commence
construction of a home on the Property. 	The Debtor has never bought and sold real estate as an
investment venture, nor has he ever bought other property with the intent to live there. The
Debtor subsequently became involved in contentious litigation. When it became apparent that
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the litigation was not going favorably, he borrowed funds and granted a mortgage on the
Property, partially for the purpose of protecting the Property from judgment liens.
The Debtor filed a Petition for Relief under Chapter 7 of the Bankruptcy Code on
September 5, 2006. The Property has a value of approximately $22,000, and there is outstanding
a principle balance of approximately $12,000 on the note secured by the first mortgage
encumbering the Property. Since the Debtor owns the Property jointly with his wife, his equity
in the Property has a value of $5000, which he asserts is exempt by virtue of his intention to
make the Property his homestead.
Section 522(f) provides in pertinent part as follows:
(f)(1) Notwithstanding any waiver of exemptions but subject to paragraph (3), the
debtor may avoid the fixing of a lien on an interest of the debtor in property to the
extent that such lien impairs an exemption to which the debtor would have been
entitled under subsection (b) of this section, if such lien is--
(A) a judicial lien, other than a judicial lien that secures a debt of a kind that is
specified in section 523(a)(5); ....
Section 522 (f) allows avoidance of judicial liens on a debtor’s property only if—and to
the extent that—those judicial liens impair an exemption to which the debtor would otherwise be
entitled. Ohio has elected to opt out of the federal exemptions provided in § 522(d) and has
instead enacted its own set of exemptions. The exemption statute provides in pertinent part as
follows:
(A) 	Every person who is domiciled in this state may hold property exempt
from execution, garnishment, attachment, or sale to satisfy a judgment or
order, as follows:
* * *
(1)(b) 	In the case of all other judgments and orders, the person’s interest,
not to exceed five thousand dollars, in one parcel or item of real or
personal property that the person or a dependent of the person uses
as a residence.
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Ohio Rev. Code 2329.66(A)(1)(b).
In order to take advantage of the avoidance powers granted by § 522, the subject property
must constitute the Debtor’s residence, or “homestead”. The Ohio Supreme Court has stated that
“[t]o constitute a homestead ... there must be residence, actual or constructive.” Mutual Building
and Investment Co. v. Efros, 152 Ohio St. 369, 373, 89 N.E. 2d 648, 651 (1949). That court
went on to state that where the subject premises “have never been used or occupied as a
homestead the right thereto can not be acquired by a mere intention to use them as such at some
indefinite future time.” Id., 152 Ohio St. at 373-74, 89 N.E. at 651.
Recognizing that exemptions are to be liberally construed in favor of the debtor, the court
in In re Lusiak, 247 B.R. 699 (Bankr. N.D. Ohio 2000), elaborated on the concept of constructive
occupancy and held that the residence requirement may be met even in an instance of physical
absence from the premises if coupled with an intent to return at some point in the future.
However, the Lusiak court held that bare allegations of an intent to return to the property are
insufficient; the debtor must show external circumstances demonstrating actual intent to return to
the premises.
The court in In re Cottingim, 7 B.R. 56 (Bankr. S.D. Ohio 1980), also allowed that a
debtor can impress property with a homestead exemption without physical occupancy of the
premises, if (1) the debtor illustrates a present intention to occupy the premises at some definite
future time, and (2) the intention is “accompanied by actual ongoing preparations for the
occupancy” which is “substantiated by demonstrative, tangible, physical evidence....” Id., 7 B.R.
at 58.
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1The Court did find a few cases from other jurisdictions that support the opposite. See In
re Huffines, 57 B.R. 740, 741–42 (M.D. Tenn 1985) (denying homestead exemption in property
on which no house stood and on which debtor had never resided); In re Bennett, 192 B.R. 584,
587–88 (Bankr. D. Me. 1996) (denying homestead exemption in unimproved property, despite
efforts over several years to prepare lot for construction by clearing land, dumping and spreading
fill, and extending water and sewer service); In re Cole, 185 B.R. 95, 97–98 (Bankr. D. Me.
1995) (denying homestead exemption in unimproved property on which debtor had never lived,
despite articulated intent to move there in the future and installation of a septic tank in
preparation thereof).
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In the instant case, the Property is not even suitable for residential purposes at the present
time inasmuch as there is no habitable structure on the property. There is no residence for the
Debtor to occupy, and never has been. Under these circumstances, the Court doubts that the
Property can be properly dubbed a homestead. This Court found no Ohio case, nor did the
Debtor cite any authority, for the proposition that a vacant lot can be impressed with a
homestead exemption. 1 However, the Court need not decide that today, because although the
Debtor insists that he intends to live on the property, he has not illustrated a present intention to
occupy the premises at some definite future time, and he is not engaging in any actual ongoing
preparations to occupy the Property as a homestead. The Debtor has not commenced building on
the property. There is no evidence that he has cleared the Property for purposes of construction,
obtained building plans or designed the prospective home, obtained bids on prospective
construction, identified a construction contractor, secured financing, signed a construction
contract, or undertaken any of the other activities attendant to constructing a residence.
Therefore, the Court finds that the Property is not eligible for homestead exemption and
thus, the relief afforded by § 522(f) is not available to avoid the judgment liens on the Property.
Accordingly, it is
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ORDERED AND ADJUDGED that the Debtor’s Motions to Avoid the Liens of
Carla Garrett (Doc. #60), Gerald Parker, Jr. and Julie Parker (Doc. # 61), Dwight Garrett (Doc. #
62), Jeff McCalla and Jennifer McCalla (Doc. #63), Laura Uhrig and David Uhrig (Doc. # 64),
Tim Hartsock and Patricia Hartsock (Doc. #65), Randy Detillion and Cynthia Detillion (Doc.
#66), Mike Secoy and Wesley Bowles (Doc. #67), Jeff Lehmar and Lisa Wrights (Doc. #68), and
Jeff Walters and Twilla Walters (Doc. # 69) are DENIED.
IT IS SO ORDERED.
Copies to:
Timothy L. Dailey, 4l0 S. Market Street, Waverly, OH 45690
Michael W. Warren, Attorney for Debtor (Electronic Service)
Amy L. Bostic, Chapter 7 Trustee (Electronic Service)
Jeff McCalla, Jennifer McCalla, 29 Grabill Court, Chillicothe, OH 4560l
Scott Andrews, Esq. 250 Civic Center Drive, Suite 400, Columbus, OH 43225
Randy Detillion, Cynthia Detillion, 18763 State Route 104, Chillicothe, OH 45601
Jeff Walters, Twilla Walters, 6434 Egypt Pike, Chillicohte, OH 4560l
Jeff Lehmar and Lisa Wrights, 8955 County Road 550, Chillicothe, OH 45601
Jeffrey J. Benson, Esq., 36 S. Paint Street, Chillicothe, OH 45601
Dwight Garrett, 620 Seminole Road, Chillicothe, OH 4560l
John C. Albert, Esq., 500 S. Front Street, Suite l200, Columbus, OH 432l5
Laura Uhrig, David Uhrig, 770 Larrick Avenue, Chillicothe, OH 45601
Gerald Parker, Jr., Julie Parker, 1015 Clinton Road, Chillicothe, OH 45601
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Tim Hartsock, Patricia Hartsock, 21290 State Route 104, Chillicothe, OH 45601
Mike Secoy, 6262 Egypt Pike, Chillicothe, OH 45601
Wesley Bowles, 2780 Maple Grove, Chillicothe, OH 45601
Scott Nusbaum, Esq., 72 N. Paint Street, Chillicothe, OH 45601
Carla Garrett, 620 Seminole Road, Chillicothe, OH 45601
James R. Leickly, Esq. 114 Misty Oak Place, Columbus, OH 43230
Office of the U.S. Trustee (Electronic Service)
# # #
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