South-Western Legal Studies in Business

Yacht Not a Homestead in Texas
Description Texas high court held that a yacht, which is mobile, cannot qualify for homestead exemption under the Bankruptcy Code as it is not attached to land. Temporary mooring at a dock does not qualify as attached to land as the boat is capable of sailing away.
Topic Bankruptcy
Key Words Homestead; Residence; Yacht
C A S E   S U M M A R Y
Facts Norris filed voluntary Chapter 7 bankruptcy. Under the Code, a debtor may claim a homestead exemption as allowed by state law. Norris claimed his 68-foot yacht as his homestead. It has four bedrooms, three bathrooms, kitchen, and upper and lower salons. While his business is in San Antonio, he claims the yacht, docked 200 miles away, as his home. The bankruptcy court refused this claim and the federal district court agreed, holding the boat was movable chattel. The decision was appealed to the 5th circuit court of appeals, which certified a question to the Texas high court of whether a motorized boat can qualify for homestead exemption under Texas law.

Question answered. No. Texas construes homestead laws generously, but courts cannot unduly stretch the laws beyond their constitutional and statutory meaning and protect that which is not a homestead. Homestead protection turns not on who owns the underlying land, but on the degree to which the residence thereon is attached to it. The yacht is not attached to land. It is independent and mobile. It has self-contained utilities and plumbing. It was moved from one marina to another after bankruptcy was filed, so is obviously mobile.

Citation Norris v. Thomas, ---S.W.3d--- (2007 WL 428075, Sup. Ct., Tex., 2007)

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