FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: SCOTT K. GREENE, No. 07-16067
Debtor(s). No.
BK-N-05-54727-
SCOTT K. GREENE, GWZ
Appellant, Chapter 7
v. D.C. No.
06-CV-00567 HDM
ANABELLE SAVAGE, and 3:06-CV-00679-
Appellee. HDM-RAM
Consolidated
OPINION
Appeal from the United States District Court
for the District of Nevada
Howard D. McKibben, District Judge, Presiding
Argued and Submitted
December 12, 2008—San Francisco, California
Filed October 2, 2009
Before: Marsha S. Berzon and A. Wallace Tashima, Circuit
Judges, and Robert J. Timlin* District Judge.
Opinion by Judge Timlin
*The Honorable Robert J. Timlin, United States District Judge for the
Central District of California, sitting by designation.
14271
IN RE GREENE 14275
COUNSEL
David Rankine and Michael Lehners, Reno, Nevada, for the
appellant.
Robert C. Vohl, Reno, Nevada, for the appellee.
Professors James J. White and John A.E. Pottow, Ann Arbor,
Michigan, as amici curiae.
OPINION
TIMLIN, District Judge:
This case is an appeal of the district court’s order affirming
the bankruptcy court’s decision limiting Debtor-Appellant
Scott Greene’s homestead exemption in his bankruptcy peti-
tion to $125,000 pursuant to 11 U.S.C. § 522(p), based on the
fact that Greene established residency on his property and
filed his homestead claim within 1215 days of filing his bank-
ruptcy petition. We have jurisdiction pursuant to 28 U.S.C.
§§ 158(d)(1) and 1291.
I.
BACKGROUND
The material facts of this case are not in dispute. Greene
purchased a parcel of undeveloped land at 450 Alamosa Drive
14276 IN RE GREENE
in Sparks, Nevada, (the “Property”) in May 1994. By August
11, 2004, Greene had moved a trailer onto the Property and
was living in it. On that day, Greene recorded a declaration
of homestead with the Washoe County Recorder’s Office for
a trailer and the Property. Sixteen days later, on August 27,
2004, Greene filed a Chapter 13 bankruptcy petition. Greene
concedes that until early August 2004, he never lived on or
made any improvements to the Property. On October 8, 2004,
Rena Wells (“Wells”), a creditor, filed an objection to
Greene’s claim of a homestead exemption, asserting that
Greene’s homestead was not his bona fide residence. Greene
voluntarily dismissed the petition on February 17, 2005.
On August 11, 2005, Greene was cited by Washoe County
for illegally using a recreational vehicle for dwelling pur-
poses. At that time, Greene told authorities he was no longer
using the trailer as a dwelling but was sleeping on the Prop-
erty in his tent.
On October 15, 2005, Greene filed a Chapter 7 bankruptcy
petition (the petition at issue in this appeal), in which he
claimed the market value of the Property — $240,000, the
same amount as the market value he claimed for the Property
in his initial Chapter 13 petition in 2004 — as exempt pursu-
ant to the Nevada homestead statute. Wells again filed an
objection to the claim of exemption, challenging the validity
of the homestead exemption and also contending that, even if
the homestead was valid, it should be reduced to $125,000
pursuant to 11 U.S.C. § 522(p)(1), because the homestead was
acquired within 1215 days of the filing of the petition.
The Bankruptcy Court for the District of Nevada concluded
that Greene’s homestead was a property interest acquired
within 1215 days of his bankruptcy petition filing, because he
filed his declaration of a homestead during that time period.
Therefore, it held, Greene’s homestead exemption was limited
to $125,000 under Section 522(p). See In re Greene, 346 B.R.
835 (Bankr. D. Nev. 2006). Greene appealed.
IN RE GREENE 14277
Subsequently, the trustee filed a motion for an order autho-
rizing sale of the Property free and clear of liens and encum-
brances. Greene filed an opposition to this motion, arguing,
inter alia, that he was entitled to the post-acquisition appreci-
ation in the market value of the Property. The bankruptcy
court rejected Greene’s contention, finding that there was no
increase in the value of the Property from the time Greene
acquired it until the time he filed his petition, and that any
increase in value after that was available to the trustee as post-
petition appreciation.
Greene appealed both orders of the bankruptcy court to the
district court. The district court affirmed the bankruptcy court
in all respects. Greene filed a timely notice of appeal to this
Court.
II.
DISCUSSION
A. Standard of Review
This court reviews de novo a district court’s decision on
appeal from a bankruptcy court. See Suncrest Healthcare Ctr.
LLC v. Omega Healthcare Investors, Inc. (In re Raintree
Healthcare Corp.), 431 F.3d 685, 687 (9th Cir. 2005). Thus,
this court applies the same standard of review applied by the
district court. See id. The bankruptcy court’s conclusions of
law and interpretation of the Bankruptcy Code are reviewed
de novo and its factual findings for clear error. See Salazar v.
McDonald (In re Salazar), 430 F.3d 992, 994 (9th Cir. 2005).
This court must accept the bankruptcy court’s findings of fact
unless, upon review, the court is left with the definite and firm
conviction that a mistake has been committed by the bank-
ruptcy judge. See Latman v. Burdette, 366 F.3d 774, 781 (9th
Cir. 2004).
14278 IN RE GREENE
B. Interpretation of 11 U.S.C. § 522(p)(1)
[1] Under 11 U.S.C. § 522, a debtor in bankruptcy can
exempt certain property from the bankruptcy proceedings and
protect that property from creditors. See 11 U.S.C. § 522(b).
Section 522 contains a list of various interests in property that
a debtor can exempt. See § 522(d). However, the Bankruptcy
Code provides an opt-out provision whereby the state can
either require the debtor to exempt property under the state
law exemptions or grant the debtor the option of choosing
between state exemptions and the § 522(d) exemptions. See
§ 522(b)(2).1
[2] In 2005, Congress amended the Bankruptcy Code by
enacting Section 522(p)(1), which limits a debtor’s ability to
take advantage of the state homestead exemptions. Section
522(p)(1) provides as follows:
Except as provided in paragraph (2) of this subsec-
tion and sections 544 and 548, as a result of electing
under subsection (b)(3)(A) to exempt property under
State or local law, a debtor may not exempt any
amount of interest that was acquired by the debtor
during the 1215-day period preceding the date of the
filing of the petition that exceeds in the aggregate
$136,8752 in value in —
(A) real or personal property that the debtor or a
dependent of the debtor uses as a residence;
(B) a cooperative that owns property that the
1
Nevada is an opt-out state. E.g., In re Kane, 336 B.R. 477, 480 (Bankr.
D. Nev. 2006).
2
The dollar amount was adjusted by the Judicial Conference of the
United States from $125,000 to $136,875 in 2007 to reflect the change in
the Consumer Price Index published by the Department of Labor, pursuant
to 11 U.S.C. § 104.
IN RE GREENE 14279
debtor or a dependent of the debtor uses as a resi-
dence;
(C) a burial plot for the debtor or a dependent of
the debtor; or
(D) real or personal property that the debtor or
dependent of the debtor claims as a homestead.
[3] Section 522(p) was part of the Bankruptcy Abuse Pre-
vention and Consumer Protection Act of 2005 (“BAPCPA”),
enacted on April 20, 2005.3 Although the bulk of BAPCPA
became effective on October 17, 2005, Section 522(p) became
effective on the date of enactment. See, e.g., In re McNabb,
326 B.R. 785, 788 n.7 (Bankr. D. Ariz. 2005). As Greene’s
petition was filed on October 15, 2005, Section 522(p) applies
to this case.
Section 522(p) was intended to “address the well-
documented and often-expressed concern by members of
Congress about the so-called ‘mansion loophole’ by which
wealthy individuals could shield millions of dollars from
creditors by filing bankruptcy after converting nonexempt
assets into expensive and exempt homesteads in one of the
handful of states that have unlimited homestead exemptions
. . . .” In re Kane, 336 B.R. at 481-82. In a report issued in
1997, the National Bankruptcy Review Commission identi-
fied the problem and found: “ ‘In deferring to state law
exemptions, the current system . . . multiplies the opportuni-
ties for forum shopping and prebankruptcy asset conversion.
. . .’ ” Id. at 482 (quoting Nat’l. Bankr. Rev. Comm’n, Bank-
ruptcy: The Next Twenty Years, National Bankruptcy Review
Commission Final Report, Oct. 20, 1997, at 124).
3
Pub. L. No. 109-8, 119 Stat. 23 (2005) (codified as amended in scat-
tered sections of 11 U.S.C.).
14280 IN RE GREENE
Applying Section 522(p)(1), the bankruptcy court held —
and the district court agreed — that the $125,000 cap does
apply in this case, and that Greene’s homestead exemption is
limited to the cap amount. In so holding, the bankruptcy and
district courts reasoned that the “interest” stated in Section
522(p)(1) includes the homestead, which was “acquired” by
Greene when he moved onto the Property to establish his resi-
dence and filed a homestead declaration with the Washoe
County Recorder’s Office. Greene contends, to the contrary,
that establishing a residence on real property and recording a
homestead declaration does not establish a property “interest,”
but rather is a property classification. The phrase “amount of
interest,” as used in Section 522(p)(1), Greene contends,
should be construed as a quantifiable measure and therefore
as applicable only to an ownership interest in a property.
The amici brief of certain bankruptcy law professors takes
a slightly different analytical tack: it emphasizes the use of the
term “acquire” in the statute, and argues that the claiming of
a homestead designation on an interest in property is different
from the acquisition of the underlying property interest in the
property. Amici contend that it is only the latter legal event
with which Section 522(p) concerns itself.
We find these analyses helpful, and using them as well as
other interpretive aids, conclude that perfection of a home-
stead exemption does not constitute acquisition of a property
interest for purposes of Section 522(p)(1).
A recent Fifth Circuit case, Wallace v. Rogers, 513 F.3d
212 (5th Cir. 2008), is a particularly useful starting place in
determining the applicability of Section 522(p)(1) to a
claimed homestead exemption. There, the debtor inherited
property outside the 1215-day window prior to filing a bank-
ruptcy petition, and subsequently moved onto it within the
1215-day period of time, but still before filing her bankruptcy
petition. In her petition, the debtor elected to take the Texas
homestead exemption which had no monetary limit. A judg-
IN RE GREENE 14281
ment creditor objected, asserting that Section 522(p)(1)
applied because the debtor’s current residence had not been
her homestead for the 1215-day period preceding her bank-
ruptcy petition. The Fifth Circuit disagreed and allowed the
debtor to claim the full homestead exemption.
In construing the term “interest” as used in Section 522
(p)(1), the Fifth Circuit followed the analytical steps required
when federal tax lien law affects state property rights. See id.
(citing United States v. Craft, 535 U.S. 274 (2002)). Under
that doctrine, a court “look[s] initially to state law to deter-
mine what rights the taxpayer has in the property the Govern-
ment seeks to reach, then to federal law to determine whether
the taxpayers state-delineated rights qualify as property or
rights to property within the compass of the federal tax lien
legislation.” Craft, 535 U.S. at 278 (internal quotations omit-
ted). The Craft court reasoned:
A common idiom describes property as a “bundle of
sticks” — a collection of individual rights which, in
certain combinations, constitute property. State law
determines only which sticks are in a person’s bun-
dle. Whether those sticks qualify as “property” for
purposes of the federal tax lien statue is a question
of federal law.
In looking to state law, we must be careful to con-
sider the substance of the rights state law provides,
not merely the labels the State gives these rights or
the conclusions it draws from them. Such state law
labels are irrelevant to the federal question of which
bundles of rights constitute property that may be
attached by a federal tax lien.
Id. at 278-79 (internal citations omitted, emphasis added).
[4] We agree with the Fifth Circuit that the Craft approach
is the proper beginning point in addressing the problem before
14282 IN RE GREENE
us. Using that framework, we first look to Nevada law to
determine what Greene acquired when he recorded his home-
stead declaration, and then to Section 522(p)(1) to determine
whether that declaration qualifies as an “any amount of inter-
est that was acquired” within the compass of Section 522(p).
[5] The Nevada homestead exemption derives from the
Nevada state constitution, which provides in relevant part that
a “ ‘homestead as provided by law, shall be the exempt from
forced sale under any process of law.’ ” Contrevo v. Mercury
Fin. Co. (In re Contrevo), 153 P.3d 652, 654 (Nev. 2007)
(emphasis in original). Reading this provision broadly, the In
re Contrevo Court held that Nevada “has a constitutional
imperative that homestead property be exempt from legal pro-
cess and placed outside the reach of creditors,” and noted that
Nevada’s exemptions have historically been absolute and
unqualified with a few exceptions. Id. As In re Contrevo indi-
cates, the substantive right gained via a homestead declaration
in Nevada, although broad, is a “legal protection of” the prop-
erty interest, not “an interest” in the equity or title of the prop-
erty.4
A second recent Nevada Supreme Court decision reinforces
this conclusion. Savage v. Pierson, 157 P.3d 697, 700, 701
(Nev. 2007), explained that the homestead exemption “only
4
Other states’ homestead exemptions have been similarly characterized.
For example, a bankruptcy court applying Florida law explained:
Homestead is simply a status, constitutionally defined, which
exempts certain property from execution . . . . It is not a property
interest. When a Florida resident’s property acquires homestead
status, the owner does not acquire any of the rights traditionally
associated with property interests: the right to possession, the
right to use, the right to transfer — the owner already holds what-
ever of those he has. Accordingly, homestead status in Florida is
not properly conceptualized as a stick in the bundle; rather, it is
a protective safe in which the bundle is put.
Venn v. Reinhard (In re Reinhard), 377 B.R. 315, 319-20 (Bankr. N.D.
Fla. 2007).
IN RE GREENE 14283
protects the amount of equity the debtor holds in the property
listed in Nev. Rev. Stat. § 115.005(2),” so “a debtor must
have some form of ‘equity’ in his residence in order to claim
a homestead exemption in the residence.” Savage went on to
conclude that a security deposit in a residential lease does not
qualify as equity in the property under the state’s homestead
exemption, because the “statutory definition of ‘equity’ con-
templates more than a general ‘interest’ in the property or the
right to possession, it contemplates ownership.” Id. If the
debtor has such ownership, then she can choose to protect up
to $350,000 of equity in her property from legal process by
invoking the state’s homestead exemption, as long as she
meets the procedural requirements to establish a homestead as
defined by Nev. Rev. Stat. § 115.020.5 When the requirements
are met, a debtor has the substantive right to classify his prop-
erty as exempt under the state homestead laws. See generally,
I.H. Kent Co. v. Miller, 366 P.2d 520, 522 (Nev. 1961) (“The
exercise and preservation of the homestead exemption is held
to be a purely personal right which can be exercised or
waived by the debtor.”).
[6] In Nevada, then, the role of the homestead exemption
is the same as that of the Texas exemption analyzed in Wal-
lace: “The homestead exemption and the property interest
impressed with that exemption are discrete concepts: the for-
mer is the debtor’s legal right to exempt certain property
interests from the bankruptcy estate, the latter is the debtor’s
vested economic interest in the property itself.” Wallace, 513
F.3d at 225.
We now turn to the question whether Greene’s rights to a
homestead exemption under Nevada law are affected by the
provisions of Section 522(p). In answering this question, we
5
Nev. Rev. Stat. § 115.020 generally requires that a party seeking to
record a homestead must file a written declaration explaining that he or
she is a householder; is residing on the premises; and that he or she intends
to use the property as a homestead.
14284 IN RE GREENE
differ slightly with the Fifth Circuit in Wallace, although our
ultimate conclusion — that Section 522(p) does not limit the
homestead exemption that can be claimed under state law if
the debtor owned the property before the 1215 day period —
is the same.6
[7] Unlike the Fifth Circuit in Wallace, 513 F.3d at 226, we
do regard the language of Section 522(p)(1) as ambiguous. As
one bankruptcy court has explained:
What Congress meant in § 522(p) is not entirely
clear in this situation. At least one court has held that
the phrase [in Section 522 (p)(1)] encompasses the
acquisition of a “homestead interest,” In re Greene,
346 B.R. 835 (Bankr. D. Nev. 2006), while other
courts disagree, . . . In re Lyons, 355 B.R. 387
(Bankr. D. Mass. 2006). There is enough ambiguity
to require the statute to be construed.
In re Reinhard, 377 B.R. at 319-20.
[8] The salient terms (“amount,” “interest,” and “acquire”)
are not defined in the Bankruptcy Code, and although they
have common, every-day definitions, those definitions are
broad enough to have already generated contradictory lower
court decisions on the matter. We therefore cannot rely on the
statutory language alone, but must also turn to extra-textual
sources, e.g., legal dictionaries and legislative history, to shed
light on the meaning of Section 522(p). See Merkel v.
6
Wallace held that the term “interest” as used in Section 522(p)(1)
refers to vested economic interests, such as title and equity, that a debtor
acquires in homestead property during the 1215 day period preceding the
date a debtor files a petition for bankruptcy. It further held that a home-
stead exemption is not a separate interest in property but rather is the sta-
tus of a withdrawn interest in property that was acquired prior to
bankruptcy. “Thus a homestead interest established within the statutory
period, without more, does not fall within the purview of Section
522(p)(1).” Wallace, 513 F.3d at 224.
IN RE GREENE 14285
Comm’r, 192 F.3d 844, 848 (9th Cir. 1999) (“[I]f the statute
is ambiguous, we consult the legislative history, to the extent
that it is of value, to aid in our interpretation.”) (internal quo-
tations omitted).
[9] That said, we still begin with the statutory language. See
Leocal v. Ashcroft, 543 U.S. 1, 8 (2004). First, Section 522(p)
employs the term “interest” to describe what is acquired by
the debtor and can be subject to the monetary limitation. The
term “interest” is defined in Black’s Law Dictionary as “a
legal share in something; all or part of a legal or equitable
claim to or right in property.” Black’s Law Dictionary 885
(9th ed. 2009). Various forms of relationships to real property
are referred to as property “interests,” including possessory
interests, leasehold interests, and ownership interests. Such
interests are said to “run with the land” — that is, they accom-
pany a conveyance or assignment of land, passing from one
purchaser to another through the chain of title. See Mobil Oil
Corp. v. Brennan, 385 F.2d 951, 953 (5th Cir. 1967).
[10] Unlike such property interests, a homestead right, gen-
erally speaking, does not “run with the land.” Instead, a
homestead is a “personal right or privilege given by constitu-
tional or statutory provisions . . . [that] ordinarily is dependent
on some title or interest in real property, and it does not exist
as a separate estate in property independently of such title or
interest.” 40 Corpus Juris Secundum, Homestead § 3 (2006)
(footnote omitted). Nevada law, for example, defines a home-
stead as “property consisting of” various structures “to be
selected by the husband and wife, or either of them, or a sin-
gle person claiming the homestead,” Nev. Rev. Stat.
§ 115.005, thus presupposing an existing, previously acquired
property right and permitting only certain individuals already
holding that right to claim a homestead. Thus understood, a
homestead is a “categorization” of a status or a classification,
not a property interest. See Wallace, 513 F.3d at 220, 225; see
also In re Lyons, 355 B.R. at 390 (“The homestead is not a
14286 IN RE GREENE
quantifiable interest; it is a classification of property under
state law.”)
[11] Second, the different verbs used in Section 522(p) pro-
vide support for this understanding. Subsection 522(p)(1),
when stating what interest may be exempted, uses the phrase
“amount of interest that was acquired.” (Emphasis added.)
However, when referring to the homestead in Section
522(p)(1)(D), the verb used is different: “real or personal
property that the debtor or dependent of the debtor claims as
a homestead.” (Emphasis added.) The fact that Congress used
two different verbs to describe the process through which
these two rights are gained by a debtor suggests a substantive
distinction.7
Third, the use of the term “amount” to qualify “interest”
indicates that the requisite “interest” must be one capable of
quantification. See Wallace, 513 F.3d at 218-220; In re Lyons,
355 B.R. at 390-91. Further, the exception contained in Sec-
tion 522(p)(2)(B) uses the term “interest” in a manner that
supports the idea of a quantifiable interest. The exception
states that the monetary cap will not apply to any “interest
transferred from a debtor’s previous principal residence
(which was acquired prior to the beginning of such 1215-day
period) into the debtor’s current principal residence, if the
debtor’s previous and current residences are located in the
same State.” The term “interest” as used in the exception must
7
Cases analyzing the appreciation in value issue with regard to Section
522(p) support our reliance on the terms “interest” and “acquired.” See In
re Sainlar, 344 B.R. 699, 674 (Bankr. M.D. Fla. 2006) (“Both a reading
of the plain, unambiguous language of § 522(p)(1) and the statute’s legis-
lative history lead to the same result: the monetary cap of § 522(p) is inap-
plicable to property purchased by a debtor more than 1,215 days before
the petition date.”); see also In re Blair, 334 B.R. 374 (Bankr. N.D. Tex.
2005). Both cases emphasize the use of the terms “interest” and “ac-
quired” in the statute and hold that the phrase “ ‘interest that was acquired’
as used in § 522(p)(1) means the acquisition of ownership of real proper-
ty.” In re Sainlar, 344 B.R. at 673.
IN RE GREENE 14287
mean the monetary value or equity taken from the previous
principal residence, as the residence itself is not, of course,
transferred. We conclude that, as Lyons put it, “the homestead
is not a quantifiable interest; it is a classification of property
under state law.” Id. at 390.
[12] The final term in Section 522(p)(1) that warrants par-
ticular attention is “acquired.” Black’s Law Dictionary
defines “acquire” as “[t]o gain possession or control of; to get
or obtain.” Black’s Law Dictionary 26 (9th ed. 2009). As
amici point out, acquiring by gaining possession or control of
a property interest usually occurs through a properly executed
deed or other instrument of conveyance. The term “acquire”
would not be used, in common parlance, to refer to classifica-
tion of the property as a homestead.8 Support for this interpre-
tation can also be found in the exception contained in Section
522(p)(2)(B), where the verb “acquired” is used in conjunc-
tion with the debtor’s previous principal residence. In that
context, it appears that Congress intended “acquire” to mean
“gaining possession or control” by purchasing or gaining an
ownership interest, either legal or equitable.
Based on the foregoing analysis of the terms used in Sec-
tion 522(p)(1) and their juxtapositions, the most plausible
interpretation of Section 522(p)(1) is that the act of recording
a homestead or moving onto the property to establish resi-
dency is not an “amount of interest acquired” for purposes of
applying the monetary cap in Section 522(p).
The legislative history fully supports this conclusion. Dur-
ing the debate on S. 256, the bill that became the 2005 BAP-
CPA amendments, Senator Thomas Carper of Delaware told
his colleagues:
8
Notably, the exception for new residences contained in Section
522(p)(2)(B), also uses the verb “acquired,” in conjunction with the debt-
or’s previous principal residence. In that context as well, it appears that
Congress intended “acquire” to mean “gaining possession or control” by
purchasing or gaining an ownership interest, either legal or equitable.
14288 IN RE GREENE
[U]nder current law, a wealthy individual in a State
such as Florida or Texas can go out, if they are a
millionaire, and take those millions of dollars and
invest that money in real estate, a huge house, prop-
erty, and land in the State, file for bankruptcy, and
basically protect all of their assets . . . With the legis-
lation we have before us, someone has to figure out
that 2 1/2 years ahead of time people are going to
want to file for bankruptcy and be smart enough to
put the money into a home . . . .
151 Cong. Rec. S. 2415 (Mar. 10, 2005).
Similarly, in the House of Representatives, Rep. F. James
Sensenbrenner of Wisconsin placed a “Summary of Principal
Provisions” of S. 256 into the record, which stated that “S.
256 closes the [mansion] loophole for abuse by requiring a
debtor to reside in the state for at least 2 years before he or
she can claim the state’s homestead exemption . . . [and] . . .
to own the homestead for at least 40 months [1215 days]
before he or she can use state exemption law . . . .” 151 Cong.
Rec. H. 1993, 2049 (Apr. 14, 2005).
And the House Committee Report indicated that: “The bill
. . . restricts the so-called ‘mansion loophole’ . . . by requiring
a debtor to own the homestead for at least 40 months [1215
days] before he or she can use state exemption law; current
law imposes no such requirement.” H.R. Rep. No. 109-31
(Part I) (2005) (“If the debtor owns the homestead for less
than 40 months, the provision imposes a $125,000 homestead
cap.”) (emphasis added).9 These accounts of the statute all
9
From an equitable perspective, it might seem illogical for Congress to
have targeted those people who convert cash or other non-exempt assets
into the purchase of a home to shield themselves from creditors, but not
be concerned with people such as Greene, who convert their non-
residential property into a homestead immediately before filing a bank-
ruptcy petition. We are bound, however, by Congress’s decision, whether
IN RE GREENE 14289
emphasize a concern with short-term ownership of the home-
stead property, not a conversion of non-residential into resi-
dential property or a new declaration of a homestead through
formal processes.
[13] We hold that “any amount of interest that was
acquired,” as used in Section 522(p)(1), means the acquisition
of ownership of real property and that the monetary cap in
Section 522(p) does not apply to property to which a debtor
acquired title more than 1215 days before she or he filed a
bankruptcy petition. That language does not include a home-
stead claim for the underlying property interest, which claim
was recorded within the 1215-day period.10
[14] We further hold that, as the facts here are undisputed
with regard to when Greene purchased his Property, Greene’s
homestead is not subject to the $125,000 cap contained in
Section 522(p), because he purchased the underlying property
interest more than 1215 days before the bankruptcy filing.
[15] In accordance with the foregoing discussion, we will
reverse the district court’s order affirming the bankruptcy
it is thoroughly logical or not. We note that there are other avenues in the
Bankruptcy Code for addressing bad faith claims by a debtor. See, e.g., 11
U.S.C. § 727(a)(4)(B) (authorizing denial of discharge for presenting
fraudulent claims). Consequently, concerns about such bad faith claims
should not impact the interpretation of Section 522(p).
10
Other courts have also considered the applicability of Section
522(p)(1) when a debtor purchased the property outside the 1215-day win-
dow and have held that the date of ownership or acquisition of the prop-
erty is the date of significance for purposes of determining the
applicability of Section 522(p)(1). See In re Virissimo, 332 B.R. 201, 207
(Bankr. D. Nev. 2005) (“Because the debtors acquired their homes within
the 1215 days before the filing, they are limited to the $125,000 home-
stead set forth in that § [section 522(p)] notwithstanding that the Nevada
homestead is higher.”); In re McNabb, 326 B.R. at 788 (“Code § 522(p),
as added by BAPCPA, applies a $125,000 cap on a homestead if it was
acquired by the debtor within 1215 days prepetition . . . .”).
14290 IN RE GREENE
court’s decision that, where a debtor initiates his residency on
the property and records a homestead during the 1215-day
period prior to filing his bankruptcy petition, Section 522(p)
places a monetary cap on the state law homestead even
though the debtor purchased the property before the com-
mencement of the 1215-day period.11
C. Pre-Petition Appreciation of Exempted Property
Greene further argues that the bankruptcy court erred in
failing to provide him an evidentiary hearing as to the amount
of “pre-petition appreciation” of the Property before granting
the trustee authorization to sell the Property. The Property
subsequently sold for $370,000, far more than the $240,000
to $260,000 he estimates the property was worth in 2004. His
claim, in essence, is that the bankruptcy court did not deter-
mine what portion of this appreciation occurred prior to the
filing of his petition in 2005. Any pre-petition appreciation,
he argues, properly is exempted from the estate.
[16] We agree with the bankruptcy court that, on Greene’s
own admissions, no such pre-petition appreciation occurred.
In his 2005 Chapter 7 petition, the petition at issue in this
appeal, he declared, under penalty of perjury, that the value
of the Property was $240,000. If the value of the property in
2005 when he filed the petition was $240,000, the subsequent
sale of the property for a higher amount necessarily captures
only post-petition appreciation. Greene does not argue that
any such post-petition appreciation is exempt. Indeed, his
claim is that the bankruptcy court failed to conduct a hearing
to determine how to divide the appreciation pre- and post-
petition, so that the pre-petition appreciation would be
exempted.
11
Greene does not argue that the value of the Property increased because
he initiated his residence there by moving the trailer and tent onto the land.
We do not decide, therefore, whether the monetary cap would apply to the
value of improvements to homestead property effected during the 1215
days preceding the petition.
IN RE GREENE 14291
As the bankruptcy court correctly held, no evidentiary hear-
ing is necessary to resolve this question on these facts.12 If
Greene’s claim is that his 2005 petition incorrectly declared
the value of the Property, the proper course of action would
be for him to amend his petition pursuant to FED. R. BANKR.
P. 1009(a), in which “[a] voluntary petition, list, schedule, or
statement may be amended by the debtor as a matter of course
at any time before the case is closed.” We note that a court
may disallow the amendment only upon “a showing of bad
faith or prejudice to third parties,” Arnold v. Gill (In re
Arnold), 252 B.R. 778, 784 (9th Cir. BAP 2000) (quoting
Magallanes v. Williams (In re Magallanes), 96 B.R. 253, 256
(9th Cir. BAP 1988)), but take no position as to whether bad
faith or prejudice exists in this case.
[17] We therefore hold that, absent any proper amendment
to the petition, the bankruptcy estate is entitled to retain all of
the appreciation in the value of the Property; that is, any value
in excess of $240,000.
III.
DISPOSITION
AFFIRMED, in part; REVERSED, in part; and
REMANDED for proceedings consistent with this opinion.
Each party shall bear his or her own costs on appeal.
12
The bankruptcy court also declined to allow Greene to present evi-
dence of pre-petition appreciation, stating that there was no point for
Greene to do so because he was only entitled to an exemption of
$125,000, the amount of the monetary cap. Specifically, the court said, “it
doesn’t matter what the value of the property is because it’s never going
to be more than $125,000 on the date of the filing of the petition. So the
value of the property itself doesn’t matter . . . .” Given our holding above
with respect to the Section 522(p)(1) monetary cap, the value of the Prop-
erty at the time of the petition is material, because Greene’s exemption is
not limited to $125,000. On the record before the bankruptcy court, how-
ever, there was no bona fide dispute as to the value of the Property at the
time of the petition, given Greene’s signed declaration and his failure to
make any effort to file an amended schedule declaring a higher value.