In Utah, debtors can protect as much as $30,000 of value in a primary personal residence under Utah Code Section 78B-5-503. This is known as the homestead exemption. On October 24, 2013, the Utah Court of Appeals issued its opinion in Jackson v. Halls, 2013 UT App 254, which addresses this exemption.
In Jackson v. Halls, Jackson executed on and purchased the personal residence of Halls with a credit bid at the Sheriff's sale. After the sale, Jackson gave Halls a credit for the value of the homestead exemption toward the judgment against Halls rather than pay Halls in cash. Of course, Halls objected and moved to have the trial court compel payment in cash.
Jackson argued that Halls was not entitled to a cash payment from the sale, because Jackson purchased the residence with a credit bid rather than with cash. Jackson reasoned that because no cash passed hands through the Sheriff's sale the homestead exemption was satisfied by Jackson granting a credit against the judgment. The trial court agreed and denied the motion.
Recognizing that Jackson's position undermined the purpose of the exemption, the Court of Appeals reversed the trial court. The Court of Appeals noted that Utah Code Section 78B‐5‐503(5)(b) protects the value of the homestead exemption from further execution for a one-year period. If a creditor were able to avoid cashing out the debtor's homestead exemptions simply by purchasing the debtor's residence with a credit bid, the one-year protection would be meaningless. Accordingly, in the future, creditors must come prepared to cash out the debtor's homestead exemption when they make credit bids for the purchase of primary personal residences at Sheriff's sales.
Copyright © Daniel L. Day 2013