A creditor may seek enforcement of a debt owed by a debtor through execution, attachment, or garnishment of the debtor's property. A homestead, which is the property an owner uses as a residence, is exempted from attachment and from execution or forced sale for the owner’s unsecured debts up to $125,000.
The homestead exemption amount is limited to the lesser of: (1) $125,000 if the homestead consists of real property, or $15,000 if the homestead consists of personal property; or (2) the total net value of the homestead property. The homestead property includes land, manufactured homes, mobile home, and improvements. Net value is defined as the market value of the property less all liens and encumbrances that are senior to the judgment being executed upon.
Judgments that are greater than $125,000 become liens on the value of the homestead in excess of the homestead exemption. The exemption also applies, for one year, to proceeds of the voluntary sale of a homestead for the purpose of acquiring a new homestead, and to proceeds from insurance covering destruction of homestead property held for use in restoring or replacing the homestead property.
The homestead exemption is not available against an execution or forced sale to satisfy certain kinds of judgments, including: judgments on mortgages or deeds of trust on the property; construction liens, laborer's liens, and other liens arising out of and against the particular property; child support or spousal maintenance obligations; debts owed to the state for the recovery of medical assistance costs; or condominium or homeowners' association liens; or for sales and use taxes that are collected and held in trust by the property owner but not remitted to the Department of Revenue.
Wilson v. Rigby.
In Wilson v. Rigby, the 9th Circuit Court of Appeals held that the homestead exemption amount is fixed at the date of the filing of the petition, and could not be amended for a greater exemption amount due to post-filing appreciation of the homestead property.
In re Good.
In In re Good, the United States Bankruptcy Appellate Panel for the 9th Circuit held while the Washington law on homestead exemptions does not define a forced sale, bankruptcy sales are forced sales. It also held that the one-year reinvestment requirement does not apply to forced sales of a homestead.
The definition of homestead is expanded to include real or personal property that the dependent of an owner uses as a residence. " Dependent" has the same meaning given in the federal bankruptcy code.
A "forced sale" is defined to include any sale of a homestead property in a bankruptcy proceeding. Reinvestment provisions do not apply to the proceeds.
The homestead exemption amount is increased to the greater of:
The county median sale price of a single-famliy home in the preceding year shall be determined by using data from the Runstad Department of Real Estate at the University of Washington, or any successor entity designed by the Office of Financial Management.
In a bankruptcy case, the debtor's exemption shall be determined on the date the bankruptcy petition is filed. If the value of the debtor's interest in homestead property on the petition date is less than or equal to the amount that can be exempted under the homestead law, then the debtor's entire interest in the property, including the debtor's right to possession and interests of no monetary value, is exempt. Any appreciation in the value of the debtor's exempt interest in the property during the bankruptcy case is also exempt, even if it exceeds the statutory limit.