In Phoenix, Mary Drummond’s travels with her husband in their motorhome have taken them to almost every state, embodying a nomadic lifestyle that was more than just a journey—it was their full-time residence. However, a recent ruling by the Arizona State Supreme Court has challenged the legal status of their motorhome as a home, significantly impacting not only the Drummonds, who filed for bankruptcy in 2022, but also anyone in Arizona facing bankruptcy while living in an RV.
The heart of the matter lies in the concept of the homestead exemption, designed to shield individuals from losing their primary residence during bankruptcy proceedings. Typically, this protection extends to traditional homes and mobile homes. Yet, when the Drummonds included their motorhome as a primary asset in their bankruptcy filing, the question arose: does a motorhome qualify as a mobile home under Arizona law?

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What the Arizona Supreme Court’s Decision Means:

In essence, the Arizona Supreme Court’s ruling not only creates a stark contrast between the rights of motor home and RV occupants and those living in more traditional homes or mobile homes but also contradicts three previous court decisions that upheld protections for motor home and RV owners.
The court’s decision effectively bars individuals residing in motorized homes from utilizing the homestead law (ARS 33-1101) to shield their dwellings—a right that has been upheld since the state’s inception.

Arizona consumer bankruptcy attorneys highlights the robustness of Arizona’s homestead protection law for residences, but acknowledges the ambiguity surrounding the classification of a motorhome. Representing the trustee in the Drummonds’ case, attorney Terry Dake argued that the statute did not expressly include motorhomes as eligible for exemption.

Following Dake’s appeal, the Arizona Supreme Court rendered its decision in February, stating unequivocally that a motorhome does not fall under the purview of the homestead exemption. This ruling, a departure from previous interpretations, has significant implications for debtors who consider their motorhomes as their primary residences.

The Drummond Case

In the recent Drummond case, the Arizona Supreme Court made a significant ruling that challenged the conventional understanding of what constitutes a homestead. The Arizona Supreme Court concluded that while a mobile home qualifies for exemption, a motorhome does not. This decision hinges on an interpretation of ARS 33-1101, which the majority believes necessitates a permanent connection to the land for exemption eligibility.

Despite arguments to the contrary, the court’s majority opinion emphasized the immobility of a traditional mobile home versus the inherent mobility of a motorhome, regardless of its function as a dwelling. For Mary Drummond and others like her, this ruling underscores a critical misconception: living in an RV does not equate to homelessness but rather a unique lifestyle choice.

In essence, while the Drummonds’ motorhome served as their home on wheels, the legal distinction between a mobile home and a motorhome has reshaped bankruptcy law in Arizona, leaving many debtors without the protection they once assumed their nomadic abodes would afford them.

Justice Timmer’s Dissent

However, Justice Timmer dissented from this view, pointing out that federal court decisions suggest a broader interpretation of the term “mobile home” under the statute. Timmer argued that both non-self-propelled trailer homes and self-propelled motorhomes could reasonably be considered mobile homes when used as permanent residences.
The crux of the matter lies in understanding that the presence of a motor should not diminish the essence of a home. As Justice Timmer aptly stated, whether a dwelling has a motor or not, the homestead exemption should safeguard the family’s interest in their residence. This sentiment aligns with previous legal precedents emphasizing that the mobility of a home does not negate its status as a primary dwelling.

Going Forward, What is Next? 

The fundamental purpose of Arizona’s homestead law is to provide a safety net for all residents facing financial hardship, ensuring they can retain their homes amidst debt challenges. However, by excluding motor home and RV owners from this vital safeguard, the court has widened the gap in legal protections, disproportionately impacting vulnerable demographics.

As the trend of motor home and RV living gains momentum, particularly among retirees and individuals seeking affordable housing alternatives, the ramifications of this decision extend far beyond the courtroom. It is imperative for the Arizona Legislature to take swift action to amend this law, thereby extending protection to all homeowners, regardless of the type of dwelling they reside. Contact Chapter Bankruptcy Lawyers for further assistance.


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