Federal judge wants high court to weigh in on 'homestead' law

Dec. 4—A federal judge wants the New Hampshire Supreme Court to weigh in on what lawmakers meant when they wrote the state's "homestead" law, which provides critical protection to homeowners who fall on hard times.

"Reasonable people can certainly interpret New Hampshire's ill-defined statutory provisions related to the homestead right in contradictory ways," U.S. District Court Judge Steven McAuliffe wrote in his Dec. 1 order.

But he said a ruling by the U.S. Bankruptcy Court in June "still seems to be at odds with New Hampshire Supreme Court precedent."

Under RSA 480:1, "Every person is entitled to $120,000 worth of his or her homestead, or of his or her interest therein, as a homestead."

That "homestead right" to equity in the family home is a crucial protection in bankruptcy cases, often keeping individuals from losing their homes to creditors. The protection typically is doubled for married couples, to $240,000 worth of equity.

But in June, Judge Bruce Harwood, the chief judge in the U.S. Bankruptcy Court in Concord, ruled that the husband of a Merrimack homeowner was not entitled to a homestead exemption because he was not listed as an owner of the family's home.

Bankruptcy attorneys said that ruling could lead to many New Hampshire residents losing their homes, especially in today's overinflated real-estate market.

The homeowner's attorney appealed that decision to the U.S. District Court in Concord. The Attorney General's office filed an amicus brief in that appeal, warning that the ruling "will have a broad impact on the ability of New Hampshire consumers to obtain a fresh start through bankruptcy and may endanger homeownership for married consumers outside of bankruptcy with debts they cannot pay if they have equity in their home."

Both the homeowner's lawyer and the AG's office asked McAuliffe to overturn the bankruptcy court decision or "certify" the case to the Supreme Court, asking the high court to render an opinion on the issues at stake.

McAuliffe decided to ask the high court to weigh in.

"The Bankruptcy Court's decision is clear, thoughtful, and logical in its reconciliation of ill-defined statutory language," the judge wrote. "Still, there are compelling legal arguments that give reason to doubt its conclusions."

The case turns on a sentence in the homestead law that lawmakers added in 1983, stating that the homestead right "shall exist in manufactured housing ... which is owned and occupied as a dwelling by the same person..."

Based on that language, Harwood ruled that if only one spouse owns the home, the non-owner cannot assert a homestead exemption. "The couple is not allowed to 'double-dip...,'" he wrote.

McAuliffe wrote that it "seems unlikely" that lawmakers meant to modify the homestead law except to provide that it was available to those who own and occupy manufactured housing.

However, he acknowledged that the legislative history on that point "remains murky."

So, McAuliffe ruled, it's appropriate to certify the case to the Supreme Court for an opinion, noting that "resolution of those issues implicates significant public policy matters for the state of New Hampshire."