LYMARI LOZADA RIVERA

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO
IN RE: : CASE NO. 11-06567(ESL)
:
LYMARI LOZADA RIVERA :
Debtor : CHAPTER 13
____________________________________:
OPINION AND ORDER
This case is before the court upon (i) Debtor’s Motion for Reconsideration (Docket No. 23)
of the Order granting the Trustee’s [Unopposed] Objection to [Debtor’s] Exemption under 11 U.S.C.
§ 522(d)(1) (Docket No. 16); (ii) the Trustee’s Opposition to Debtor’s Motion for Reconsideration
(Docket No. 37); and (iii) Debtor’s Short Reply thereto (Docket No. 39). The Trustee sustains that
Debtor’s claimed exemption on her real property should be denied because the structure being
constructed there is not her residence and thus 11 U.S.C. § 522 (d)(1) is inapplicable. The Trustee
also alleges that Debtor’s request for reconsideration should be denied given the strict and narrow
criteria adopted by the Court of Appeals for the First Circuit on setting aside orders under Fed. Rs.
Civ. P. 59(a) & 60(b). Conversely, Debtor contends that the real property does qualify as her
residence under the criteria used by the courts when considering this exemption and that the court
should allow the Motion for Reconsideration to review the merits of the homestead controversy
because the explanations for her failure to submit a timely answer to the Trustee’s objection
constitute excusable neglect under Fed. R. Civ. P. 60(b). For the reasons stated below, the court
denies Debtor’s Motion for Reconsideration (Docket No. 16).
Procedural Background
Debtor filed a voluntary Chapter 13 petition on August 2, 2011 (Docket No. 1) along with her
Schedules and Statements of Financial Affairs. In Schedule A, she listed one real property: Lot No.
1 measuring 1,164 m² located at Road # 167, Km 1.6, Dejaos Ward, Bayamon, Puerto Rico, where
a house is being constructed (the “Real Property”). Only the exterior walls of the house have been
built, not the ceiling. Debtor reported the current value of her interest in the Real Property at
$33,000.00 with a secured claim on it of $12,208.22. See Schedule A (Docket No. 1, p. 11). In In
her description of the Real Property, Debtor indicated that the value lot of land of the Real Property
(not the house under construction) at $15,000, and claims to have invested $5,000 in the construction
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 1 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
of the house. Id. (Docket No. 1, p. 11). In Schedule C, Debtor claimed a $20,791.78 homestead
exemption on the Real Property pursuant to 11 U.S.C. § 522(d)(1).
On November 3, 2011, the Trustee filed an Objection to Debtor’s Claim for Exemption (the
Objection”, Docket No. 16) arguing that Debtor’s Real Property is not yet a residence because it is
still under construction. Consequently, the Debtor is not actually using the Real Property as her
primary residence and may not claim a homestead exemption over the same. After due notice and
no opposition from Debtor, on November 23, 2011, the Court entered an Order granting the Trustee’s
Objection (Docket No. 21 referring to Docket No. 16).
On November 28, 2011, the Debtor filed a Motion for Reconsideration of Order Granting
[the] Trustee’s Objection to Exemption (the “Motion for Reconsideration”, Docket No. 23) alleging
that she intended to file a timely answer to the Objection, but was unable to execute a sworn
statement on or before November 23, 2011, the deadline to file an answer, due to personal
circumstances. Debtor also alleges that she and her husband began constructing a residence in the
Real Property through a personal loan secured by a mortgage, but that the process of construction is
currently stayed for lack of funds due to the substantial medical expenses they have had to incur for
the healthcare of their son, who has severe cerebral palsy. Debtor acknowledges that she sleeps with
her family at her mother’s house, which is adjacent to the Real Property. She argues, however, that
for purposes of Section 522(d)(1), the term “homestead” cannot be limited to the place where her bed
is located and that the Real Property can be claimed as exempt because the term includes adjacent
lots that are used in connection with the residence, such as the land and structure where the Debtor
and her family play, clean and park their automobiles, and use as a terrace and storage. Lastly,
Debtor avers that pursuant to Fed. Bankr. R. 4003(c), the Trustee has the burden of proof of
demonstrating that the exemption is not properly claimed and that the Trustee has not met that
burden.
After requesting and obtaining an extension of time to reply to Debtor’s Motion for
Reconsideration (Docket Nos. 24, 25, 35 & 36), on January 17, 2012, the Trustee filed an Opposition
(Docket No. 37) sustaining that the court should not even consider reviewing the merits of the Motion
for Reconsideration because the relief afforded under Fed. Rs. Civ. P. 59 & 60 is sparingly granted
2
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 2 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
and properly viewed as an extraordinary remedy. Regardless, the Trustee also briefed his objection
to Debtor’s claimed homestead exemption alleging that the Debtor admitted that she and her family
do not live in the Real Property, that it is not their actual “residence”, but rather their residence is her
mother’s house. where they all actually live. The Trustee further asserts that the precedents cited by
Debtor regarding the broad interpretation of the term “homestead” are not applicable to the instant
case because of a crucial difference: the debtor in this case does not own both lots, and thus cannot
subsume the two properties.
On January 23, 2012, Debtor filed a Short Reply to Trustee’s Opposition (Docket No. 39)
indicating that her mishap to execute the sworn statement to submit a timely answer to the Trustee’s
Objection constituted excusable neglect under Fed. R. Civ. P. 60(b). In addition, Debtor revamped
all her previous arguments in the Motion for Reconsideration regarding the claimed homestead
exemption. No further sur-replies were filed.
Applicable Law & Analysis
(A) Debtor’s Motion for Reconsideration
Although Debtor did not denominate any particular rule as the springboard for her Motion for
Reconsideration (Docket No. 23), she subsequently indicated in her Short Reply that she “is not
requesting a new trial under Rule 59 of the Federal Rules of Civil Procedure” but was rather
“requesting the relief from the order granting the Trustee’s objection to the exemption under Rule
60(b) of the Federal Rules of Civil Procedure” arguing that “answering the Trustee’s [Objection] just
a few days later due to Debtor’s impossibility to execute the sworn statement was excusable neglect
that warrants the revision of the order” (Docket No. 39, pp. 4-5).
Motions to reconsider are not recognized by the Federal Rules of Civil Procedure or the
Federal Rules of Bankruptcy Procedure in haec verba. See Jiminez v. Rodriguez (In re Rodriguez),
233 B.R. 212, 218-219 (Bankr. D.P.R. 1999), conf’d 17 Fed. Appx. 5 (1 Cir. 2001); Van Skiver v.st
United States, 952 F.2d 1241, 1243 (10 Cir. 1991); Lavespere v. Niagara Mach. & Tool Works Inc.,th
910 F.2d 167, 173 (5 Cir. 1990), cert. denied 510 U.S. 859, abrogated on other grounds by Little v.th
Liquid Air Corp., 37 F.3d 1069, 1075-76 (5 Cir. 1994). Rather, federal courts have consideredth
motions so denominated as either a motion to “alter or amend” under Fed. R. Civ. P. 59(e) or a
3
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 3 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
motion for relief from judgment under Fed. R. Civ. P. 60(b). See Fisher v. Kadant, Inc., 589 F.3d
505, 512 (1 Cir. 2009) (noting a motion for reconsideration implicated either Fed. R. Civ. Pro. 59(e)st
or 60(b)); Equity Security Holders’ Committee v. Wedgestone Financial (In re Wedgestone
Financial), 152 B.R. 786, 788 (D. Mass. 1993). “These two rules are distinct; they serve different
purposes and produce different consequences. Which rule applies depends essentially on the time
a motion is served. If a motion is served within [fourteen] days of the rendition of judgment, the1
motion ordinarily will fall under Rule 59(e). If the motion is served after that time, it falls under Rule
60(b).” Van Skiver, 952 F.2d at 1243. The substance of the motion, not the nomenclature used or
labels placed on motions, is controlling. Thus, for example, even if filed within the time limit for a
motion under Fed. R. Civ. P. 59(e), a motion seeking relief on grounds of excusable neglect will be
treated as a Rule 60(b)(1) motion, because Rule 59(e) does not provide a vehicle for a party to undo
its own procedural failures. See 12-60 Moore’s Federal Practice Civil § 60.03. Also see United
States v. $23,000 in U.S. Currency, 356 F.3d 157, 164-165 (1 Cir. 2004) (even if timely filed underst
Fed. R. Civ. P. 59(e), a motion seeking relief on grounds of excusable neglect will be treated as Fed.
R. Civ. P. 60(b)(1) motion, because Fed. R. Civ. P. 59(e) does not provide a vehicle for party to undo
its own procedural failures); Jennings v. Rivers, 394 F.3d 850, 854-856 (10 Cir. 2005) (a motionth
timely filed under Fed. R. Civ. P. 59(e) but asserting ground for relief specified under Fed. R. Civ.
P. 60(b), should be evaluated under standards applicable to Fed. R. Civ. P. 60(b) motions).
Having the Debtor expressly waived the remedies provided in Fed. R. Civ. P. 59, the court
will entertain her Motion for Reconsideration under Fed. R. Civ. P. 60(b), made applicable in
bankruptcy cases by Fed. R. Bankr. P. 9024. Although in her citation of Fed. R. Civ. P. 60(b) Debtor
emphasized subsections (1) and (6) to apparently seek relief under both [Short Reply, Docket No. 39,
p. 5], the Supreme Court has ruled that “clause (6) and clauses (1) through (5) are mutually
exclusive” and thus, a party may not seek relief in a Rule 60(b)(6) motion for any of the reasons
enumerated in clauses one through five, such as excusable neglect. Liljeberg v. Health Servs.
Acquisition Corp., 486 U.S. 847, 864 (1988). Also see Ungar v. PLO, 599 F.3d 79, 85 (1 Cir. 2010)st
See the most recently amended version of Fed. R. Bankr. P. 9023.
1
4
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 4 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
(a motion under Rule 60(b)(6) is appropriate only when none of the first five sections pertain, and
section (6) may not be used as means to circumvent those five preceding sections); Gonzalez v.
Walgreens Co., 918 F.2d 303, 305 (1 Cir. 1991) (“Rule 60(b)(6) applies only to grounds for reliefst
not covered by the first five subdivisions of Rule 60(b)”). Consequently, the Court will review the
Motion for Reconsideration only for the “excusable neglect” she alleges under Fed. R. Civ. P.
60(b)(1).
Fed. R. Civ. P. 60(b)(1) provides that “the court may relieve a party or a party’s legal
representative from a final judgment, order, or proceeding for ... mistake, inadvertence, surprise, or
excusable neglect.” In Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380,
395, 113 S. Ct. 1489, 1489, 123 L. Ed. 2d 74, 89 (1993), the Supreme Court held that the
determination of what constitutes “excusable neglect” is an equitable one, taking into consideration
certain factors: (1) the length of the delay and its potential impact on judicial proceedings; (2) the
reason for the delay, including whether it was within the reasonable control of the movant; (3)
whether the movant acted in good faith; and (4) whether granting the relief will prejudice the
opposing party. The Supreme Court concluded that “excusable neglect” is a flexible concept that is
not limited to circumstances beyond the control of the movant. Id. at 388. Prior to the Supreme
Court’s decision in Pioneer, the First Circuit had held that Fed. R. Civ. P. 60(b) was a vehicle for
extraordinary relief, and that motions invoking the rule should only be granted under exceptional
circumstances. See Lepore v. Vidockler, 792 F.2d 272, 274 (1 Cir. 1986). Subsequently, in Prattst
v. Philbook, 109 F.3d 18 (1 Cir. 1997), the First Circuit incorporated the Pioneer doctrine and hasst
sustained it ever since. See United States v. Union Bank for Sav. & Inv.(Jordan), 487 F.3d 8, 24 (1st
Cir. 2007). Also see Aja v. Fitzgerald (In re Aja), 441 B.R. 173, 177 (B.A.P. 1 Cir. 2011)st
(upholding the Pioneer test). The most important factor in this test is the reason for the delay, which
requires a statement of the reasons and a satisfactory explanation for the delay. Graphic
Communications Int’l Union v. Quebecor Printing Providence, Inc., 270 F.3d 1, 6 (1 Cir. 2001);st
EnvisioNet Computer Servs., Inc. v. ECS Funding LLC, 288 B.R. 163, 166 (D.Me. 2002). No
“excusable neglect” can be determined in the absence of unique or extraordinary circumstances. The
trial court has wide discretion to determine the existence of neglect or lack thereof and whether it was
5
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 5 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
excusable or not. See Graphic Communs. Int’l Union, Local 12-N , 270 F.3d at 6-7; $23,000 in U.S.
Currency, 356 F. 3d at 165 (“[Trial] courts enjoy considerable discretion in deciding motions brought
under Civil Rule 60(b)”); In re Shepherds Hill Development Co., 316 B.R. 406, 418 (B.A.P. 1 Cir.st
2004).
Taking into consideration the travel and circumstances of the present case, and in interest in
resolving disputes on their merits, the Court finds that Debtor’s failure to timely file an answer to
Trustee’s Objection was due to excusable neglect under Fed. R. Civ. P. 60(b)(1). Her Motion for
Reconsideration was filed only 5 days after the Order was entered (Docket Nos. 21 & 23), which the
court does not find to be a significant delay. Compare with Roldan v. Cooperativa De Ahorro &
Credito Roosevelt Roads, 2006 Bankr. LEXIS 3913 (Bankr. D.P.R. 2006) (creditor filed a motion
to vacate the default judgment and an answer to the complaint almost two months after the judgment
was entered. The Court found that two months was unexcusable neglect that delayed the
proceedings.) Moreover, the Court also finds that the Debtor acted in good faith and that her failure
to execute a sworn statement in a timely manner was justified in consideration of her personal
circumstances, including her son’s condition. Finally, this court finds that the Debtor established
meritorious arguments in her Motion for Reconsideration to support her position against the Trustee,
who has not claimed or showed any prejudice from Debtor’s brief delay. The Court also weighs the
fact that Debtor had not previously missed any previous deadlines nor requested extensions of time.
Therefore, the Motion for Reconsideration is granted to the extent of determining Debtor’s excusable
neglect. The court now proceeds to review its merits.
(B) Exemptions in general
When a debtor files a bankruptcy petition, all of his/her/its assets become property of the
bankruptcy estate [11 U.S.C. § 541] subject to the debtor’s right to reclaim certain property as exempt
under 11 U.S.C. § 522. Exempt property will be excluded from the bankruptcy estate unless a party
in interest objects. See 11 U.S.C. § 522(l); Schwab v. Reilly, 130 S. Ct. 2652, 2656; 177 L. Ed. 2d
234, 242 (2010). The mere fact that debtors claim an exemption does not necessarily mean that they
are entitled to it, since there must be compliance with statutory requirements and then an order of the
bankruptcy court to that effect. See 9A Am. Jur. 2d Bankruptcy § 1392; In re Rolland, 317 B.R. 402,
6
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 6 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
412 (Bankr. C.D.Cal. 2004); In re Colvin, 288 B.R. 477, 483 (Bankr. E.D.Mi. 2003); Carlucci &
Legum v. Murray ( In re Murray), 249 B.R. 223, 230 (E.D.N.Y. 2000).
Property that does not belong to the debtor or property in which the debtor has no interest at
the time of the filing of the bankruptcy petition generally cannot become part of the bankruptcy estate
under 11 U.S.C. § 541 and consequently cannot be exempted under 11 U.S.C. § 522.
(C) The homestead exemption
Debtor claims a homestead exemption on her Real Property under Section 522(d)(1) of the
Bankruptcy Code (Docket No. 1, p. 15), which provides as follows:
(d) The following property may be exempted under subsection (b)(2) of this section:
(1) The debtor’s aggregate interest, not to exceed $ 21,625 in value, in real property or
personal property that the debtor or a dependent of the debtor uses as a residence, in a
cooperative that owns property that the debtor or a dependent of the debtor uses as a
residence, or in a burial plot for the debtor or a dependent of the debtor. 11 U.S.C. §
522(d)(1) (emphasis added).
The term “residence” is not defined in the Bankruptcy Code. It is not synonymous of “domicile”
because “the specified enumeration of each in the Code indicates an intention to maintain a legal
distinction between them”. In re Marsico, 278 B.R. 1, 4 (Bankr. D.N.H. 2002), quoting from In re
Tomko, 87 B.R. 372, 374 (Bankr. E.D. Pa. 1988). In the Tomko, the Court carefully analyzed the
purpose behind Section 522(d)(1). It found that prior to the passage of the Bankruptcy Code, debtors
were limited to the allowance of exemptions as permitted by the state laws of their domiciliary state.
Tomko, 87 B.R. at 373. Homestead was a common exemption under most state laws. Id. at 373. The
legislative history of the Bankruptcy Code then revealed that:
subsection (d) [of 11 U.S.C. § 522] specifies the Federal exemptions to which the debtor
is entitled. They are derived in large part from the Uniform Exemptions Act,
promulgated by the Commissioners of Uniform State Laws in August, 1976. Eleven
categories of property are exempted. First is a homestead ... which may be claimed in
real or personal property that the debtor or a dependent of the debtor uses as a residence.
Id. at 374 (emphasis added), quoting House Report No. 95-595 that accompanied H.R.
8200, 95 Cong. 1 Sess. (1977), from which Section 522(d)(1) was derived.th st
The Tomko court concluded that because the term “homestead” was used in the legislative history
to describe or modify the term “residence”, “the purpose of subsection 522(d)(1) was to provide those
debtors eligible to select the federal exemptions with a homestead exemption, and that the term
‘residence’ must be interpreted in this light.” 87 B.R. at 374. Also see In re Marisco, 278 B.R. at
7
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 7 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5 (applying that same analysis). In In re Brent, 68 B.R. 893, 895 (Bankr. D. Vt. 1987), the court
explained that “a homestead is a property interest [and] property interests are not created by the
Constitution, but by existing rules or understandings that stem from an independent source such as
State law.” Accordingly, the Puerto Rico homestead law will be examined in order to determine the
meaning of the term “residence” for Section 522 purposes.
Because Debtor filed her bankruptcy petition on August 2, 2011, the court will first analyze
the Puerto Rico Homestead Act No. 87 of May 13, 1936, as amended through 2003 , codified in2
Chapter 187 of the Puerto Rico Civil Code, 31 L.P.RA. §§ 1851-1857 (the “PR Homestead Act of
1936”), which was the governing law at the time .3
Section 1 of the PR Homestead Act of 1936, as amended, provided as follows:
Every person who is the head of a family shall be entitled to possess and enjoy as a
homestead, a property that does not exceed fifteen thousand dollars ($15,000) in value,
consisting of a parcel of land and the buildings thereon, of any farm, plantation or parcel
of land, owned or lawfully possessed, and occupied as a residence by him or by his
family. The homestead right is unrenounceable; and any pact to the contrary shall be
declared null, except that said homestead right may be renounced in all cases of
mortgages insured or executed in behalf of the Federal Housing Administrator, or in
cases of loans to veterans insured or guaranteed by the United States Veterans
Administration, and in all cases of mortgages, sharecropping contracts, and promissory
notes made in behalf of the Federal Land Bank of Baltimore, the Puerto Rico Production
Credit Association, the National Farm Loan Association of San Juan, Puerto Rico, the
Small Business Administration, created by Public Law No. 163 of the 83rd Congress of
the United States of America, approved June [sic] 30, 1953, and of loans and mortgages
secured or granted by the Puerto Rico Housing Financing Authority, and the Farm Credit
Corporation and the Farmers Home Administration, and in the cases of conventional
mortgages. 31 L.P.R.A. § 1851 (emphasis added).
The PR Homestead Law of 1936 was subsequently amended by the following: Act No. 4 of March 15,
2
1939 (clarified that every head of a family to posses a homestead of a property up to the value of $500 and provided
that said right was unwaivable except in those cases of mortgages insured by or drawn in favor of the Federal
Housing Administrator); Act No. 15 of December 31, 1946 (provided that the right to homestead was unwaivable
except in those cases of mortgages insured by or drawn in favor of the Federal Housing Administrator or in cases of
loans to veterans insured or secured by the United States Veteran’s Administration); Act No. 1 of February 11, 1955
(increased the value of the homestead protection from $500 to $1,500 and added a provision regarding the Federal
Land Bank of Baltimore, the Puerto Rico Production Credit Association, and the National Farm Loan Association of
San Juan, Puerto Rico); Act No. 1 of April 24, 1957 (added a reference to the Small Business Administration); Act
No. 31 of June 15, 1965 (added the phrase “and of loans and mortgages secured or granted by the Housing Bank of
Puerto Rico” at end of the section); Act No. 13 of May 28, 1969 (added references to Farm Credit Corporation and
Farmers Home Administration); Act No. 116 of May 2, 2003 (amended the section generally, increased the value of
the homestead from $1,500 to $15,000 and added the phrase “and in the cases of conventional mortgages” at the
end).
On September 13, 2011, the Homestead Right and Family Home Protection Act [No. 195] was enacted
3
(the “PR Homestead Act of 2011”), which repealed the PR Homestead Act of 1936.
8
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 8 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Therefore, in Puerto Rico, the homestead can only be claimed by the owner of the real
property or by the head of household who “lawfully posses” the property. The phrase “lawfully
possesses” refers to cases where the property was constructed in someone else’s land with the
owner’s consent. See Garcia v. Tribunal Superior, 89 D.P.R. 130, 135 (1963) (analyzing the phrase
“lawfully possesses” in Section 1 of the PR Homestead Act of 1936). Notwithstanding, a homestead
cannot be claimed over a leased property. Pagan v. Quinones, 55 D.P.R. 950, 952-953 (1940). A
homestead can be claimed in contiguous and non-contiguous lots of land owned by the same head
of family as long as they are used for the sustainment of the family. Garcia v. Perez, 46 D.P.R. 31,
41 (1934) (homestead was declared over the actual residence and three non-contiguous lots of lands
were declared because the family was occupying and planting crops in the ones that were non-
contiguous for their sustainment).
In Puerto Rico, a repealed law can be interpreted through its subsequent amended version.
See Nadal Arcelay v. Depto. Recursos Naturales, 150 D.P.R. 715, 722 (2000). Therefore, to interpret
the PR Homestead Act of 1936, the court will also take into consideration the PR Homestead Act of
2011. Section 3 of the PR Homestead Act of 2011 clarifies that a homestead can be claimed on a
residence that belongs to an individual or head of family that is “occupied by him/her or his/her
family exclusively as a principal residence” (emphasis added). The words “principal” and
“exclusively” had never been included in the PR Homestead Act of 1936, its predecessors or
subsequent amendments until 2011. Furthermore, the PR Homestead Act of 2011’s Statement of
Reasons indicate that it was enacted to “provide[] better protection to the homes or principal
residences of all individuals residing in Puerto Rico and their respective families” (emphasis added).
Bankruptcy courts have also interpreted Section 522 of the Bankruptcy Code similarly. The term
“residence [provided in Section 522(d)(1)] at a minimum, denotes occupancy of the premises by the
debtor as a principal place of dwelling.” In re Lusiak, 247 B.R. 699, 702 (Bankr. D.N.Oh. 2000)
(emphasis added). See also In re Healy, 100 B.R. 443, 444 (Bankr. W.D.Wis. 1989) (“occupancy
requirement is the sine qua non of the homestead exemption”); In re Gandy, 327 B.R. 807, 810
(Bankr. S.D.Tx. 2005) (“Under the plain language of § 522(d)(1), the phrase ‘uses as a residence’
9
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 9 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
denotes occupancy of the proposed exempt property by the debtor.”); Alan N. Resnick & Henry J.
Sommer, 4 Collier on Bankruptcy ¶522.09[1] (16 ed. 2011) (“Essential to the right to a homesteadth
exemption is designation and occupancy of the property as a residence.”) “Occupancy” can be actual
or constructive, since absence alone is not sufficient to constitute an abandonment of the homestead.
In re Lusiak, 247 B.R. at 703. There must be “some positive indication of an intent to occupy the
premises; an undefined floating intention is inadequate”. Alan N. Resnick & Henry J. Sommer, 4
Collier on Bankruptcy ¶522.09[1] (16 ed. 2011).th
In the case at bar, Debtor acknowledges that she and her family do not “sleep” in the Real
Property (because the construction of the residential structure has been stayed for lack of funds). She
sustains, however, that they do “use and occupy” it inasmuch as they “park their cars [there]
everyday, they clean their cars there, they hang and dry their clothes there, they store their tools and
cleaning products [there], they fixed a swing in the ceiling of the first floor [there] and even rest in
a hammock there”. ¶¶ 5-8 of Debtor’s Motion for Reconsideration (Docket No. 23, p. 2). Debtor
concludes that they use the Real Property “as part and complement of their small apartment”,
referring to the space they “sleep” in at her mother’s property that is contiguous to the Real Property,
and that therefore she can claim it as her residence for Section 522(d)(1) purposes. Id. at ¶¶ 6 & 9.
To support her position, Debtor cites the following cases: Fifty v. Nickless (In re Fifty), 293 B.R. 550
(B.A.P. 1 Cir. 2003), In re Marcus, 08-81050-WRS, In re Marrama, 307 B.R. 332 (Bankr. D. Mass.st
2004); In re Edwards, 281 B.R. 439 (Bankr. D. Mass. 2002), People’s State Bank v. Stenzel, 301 F.
3d 945 (2002); In re Giles, 2011 WL 181387 (Bankr. D. Ark. 2011), In re Hughes, 306 B.R. 683
(Bankr. M.D. Ala. 2004); In re McLachlan, 266 B.R. 220 (Bankr. M.D.Fla. 2001).
Conversely, the Trustee contends that “Debtor and her dependents’ ‘residence’ or dwelling
is at her mother’s house” and that “the fact that [they] use the lot and structure under construction to
place and clean their cars, ... dry their clothes, store their tools and cleaning products and place a
swing and a hammock” does not detract from fact that they shelter, sleep, eat and basically live at the
debtor’s mother’s house, which evidently does not belong to Debtor. ¶ 11 of the Trustee’s
Opposition (Docket No. 37, p. 4). Consequently, the Trustee concludes that the Real Property is “not
yet a residence” for the exemption purposes provided in 11 U.S.C. § 522(d)(1). ¶¶ 4-5 of the
10
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 10 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Trustee’s Objection (Docket Nos. 16, p. 2 & 37).
Based on Debtor’s own factual allegations, this court finds that her principal residence and
place of dwelling is her mother’s house, not her Real Property. Therefore, she cannot claim a
homestead exemption on the contiguous property of a property that does not belong to her. Debtor’s
principal place of dwelling does not belong to the bankruptcy estate. She cannot claim it as exempt
under Section 522 and cannot therefore claim the contiguous lots as homestead either.
The court notes that in the cases cited by Debtor , the debtors claiming the homestead4
exemption on their residence’s contiguous parcel(s) actually owned both lots. That also is true in the
Puerto Rico homestead cases. See Garcia v. Perez, 46 D.P.R. at 41.
In the instant case, the Debtor has acknowledged that the property she occupies as a primary
dwelling is not hers. Thus, she cannot extend a homestead exemption over a real property used in
connection with the property where she primarily lives but does not own (i.e. her mother’s property)
and there is no dispute that the Real Property over which she claims the homestead is not currently
livable and cannot be used as a primary dwelling. Following that same logic, the Real Property is
not being used “exclusively as a principal residence” by itself, and cannot be claimed as a homestead
in its own right. See PR Homestead Act of 2011’s Statement of Reasons.
To confront that main difference from her cited caselaw and the instant case, the Debtor
briefly argues that in cases like In re Hughes, 306 B.R. 683, and In re Marrama, 307 B.R. 332, the
courts permitted a homestead exemption over a property adjacent to a leased property. Short Reply,
p. 2 (Docket No. 39). These cases are also distinguishable. In Marrama, the Debtor claimed an
exemption on a real property over which he had a Homestead Declaration pursuant to Mass. Gen.5
Laws Ch. 188, § 1. A creditor objected the claim sustaining that the debtor had abandoned it. The
Court’s analysis relied mainly on that Massachusetts’ homestead provision, which is not applicable
to the present case. Likewise, in In re Huges, the debtor claimed a $5,000 exemption on a real
The cases are: Fifty v. Nickless (In re Fifty), 293 B.R. 550, In re Marcus, 08-81050-W RS, In re Marrama,
4
307 B.R. 332; In re Edwards, 281 B.R. 439, People’s State Bank v. Stenzel, 301 F. 3d 945; In re Giles, 2011 W L
181387, In re Hughes, 306 B.R. 683; In re McLachlan, 266 B.R. 220.
The real property in that case was rented to two tenants at the time that the opinion was entered. Id. at
5
336, footnote 2.
11
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 11 of 12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
property under the Alabama Code § 6-10-2 (1975), not under the exemptions provided in Section 522
of the Bankruptcy Code, and thus in that case “state law governs the real property of th[e] exemption
claim”. Id. at 685. Therefore, In re Hughes is not applicable to the case at bar either.
The court finds that Debtor’s Real Property is not her actual principal place of dwelling nor
is it a real property contiguous to a residence she owns. The Trustee’s Objection is granted to that
extent and consequently, no homestead exemption can be claimed on the Debtor’s Real Property.
(D) Burden of proof for objections on claimed exemptions
The Debtor also alleges that the Trustee has not met his burden to prove that the exemption
is not properly claimed. Motion for Reconsideration, p. 6 (Docket No. 23).
Pursuant to Fed. R. Bankr. P. 4003(c), “the objecting party has the burden of proving that the
exemptions are not properly claimed.” Thus, the objecting party bears the burden to establish that
the debtor did not create a valid estate of homestead, or alternatively, that it no longer existed at the
time of the filing of the bankruptcy. See In re Edwards, 281 B.R. 439, 446 (Bankr. D. Mass. 2002).
In the instant case, the Trustee’s Objection is rooted on Debtor’s acknowledgment that she
does not “live” in the Real Property and that the construction of a structural residence therein has
been stayed for lack of funds. See Debtor’s Motion for Reconsideration, p. 2. Therefore, he rebutted
the prima facie effect of the claim of exemption with the acknowledgment that Debtor has not resided
Real Property as a primary dwelling. Debtor’s argument under Fed. R. Bankr. P. 4003(c) is denied.
Conclusion
In view of the foregoing, Debtor’s claimed homestead exemption on her Real Property under
11 U.S.C. § 522(d)(1) is hereby denied.
SO ORDERED.
In San Juan, Puerto Rico, this 3 day of May, 2012.rd
12
Case:11-06567-ESL13 Doc#:42 Filed:05/03/12 Entered:05/03/12 13:54:48 Desc: Main
Document Page 12 of 12