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In In re Chesler, No. 18-43795, 2019 WL 5616905 (Bankr. D. Minn. Oct. 25, 2019), Chief Judge Ridgway granted the chapter 7 trustee’s motion for turnover, determining that the pre-petition portion of the debtor’s Homestead Credit Refund was property of the estate.

The debtor filed a voluntary petition under chapter 7 on December 7, 2018. The debtor owned and occupied a homestead in St. Louis Park, Minnesota with her non-filing spouse. She had previously paid the outstanding property taxes to Hennepin County in November 2018. In Spring 2019, the debtor filed a Homestead Credit Refund Return claiming a joint Homestead Credit Refund for herself and her husband in the amount of $2,770.00, of which half ($1,385.00) was allotted to the debtor. 

The trustee argued that 93.15 percent of the debtor’s half of the Homestead Credit Refund—or $1,290.12—was property of the estate. The 93.15 percent was based on the percentage of the year that had passed as of the date of the debtor’s bankruptcy filing; December 7, 2018 was 93.15 percent of the way through 2018.

The debtor disagreed and asserted that, although she had not claimed the Homestead Credit Refund as exempt, it was not property of the estate. The debtor argued that to receive the Homestead Credit Refund, the applicable Minnesota statute required her to reside in her residence on January 2, 2019. Therefore, her interest did not exist until such requirement was met and, thus, was different from a contingent interest such as a real estate commission.

Finding the established case law concerning real estate commissions and child tax credits to be analogous to the present case, Judge Ridgway determined that the Homestead Credit Refund was part of the bankruptcy estate. Judge Ridgway explained that the relevant Minnesota Statute set forth five requirements to receive the Homestead Credit Refund and, at the time of filing, the debtor met four of the five allowing the interest to become property of the estate under 11 U.S.C. § 541(a). The last requirement—the debtor’s living in the home on January 2, 2019—“merely ‘sealed’ the proverbial ‘deal.’”

Additionally, Judge Ridgway bolstered his analysis by examining the case law concerning the child tax credit. He explained that the case law had repeatedly found the Child Tax Credit to be property of the estate despite the fact that the claimant’s/debtor’s interest in them is not finalized until the end of the tax year. Given the similarities between the Child Tax Credit and the Homestead Credit Refund, Judge Ridgeway found this case law to be persuasive.