California Building Materials Exemption in Bankruptcy
Section 704.030 of the California Code of Civil Procedure exempts up to $3.200 of the equity in building materials purchased in good faith and are about to be applied to the repair or improvement of a residence. The residence to be improved must be either the debtor’s or their spouse’s if the debtor and spouse live separate and apart.
Example: Exempt Building Materials
Only building materials purchased in good faith and are about to be applied to the improvement or repair of either the debtor’s residence or their spouse’s residence are exempt in bankruptcy in an amount not to exceed $3.200. If either the building materials were not purchased in good faith or are not about to applied to the repair or improvement of the debtor or their spouse’s residence, the building materials exemption would not apply and the building materials could be liquidated by the chapter 7 bankruptcy Trustee absent the application of another California bankruptcy exemption.
To illustrate the California building materials exemption, let’s assume that a debtor has a hole in their roof. To repair the hole the debtor buys plywood, 2×4 boards, nails, roofing tar, and composite shingles. However, before the repair can be made the debtor loses his or her job and must file for chapter 7 bankruptcy in Santa Rosa California. In this case, the debtor can exempt the purchased building materials in an amount up to $3.200 since the debtor purchased the materials in good faith (they legitimately bought the materials for the purpose of repairing their roof) and the materials were in fact about to be applied to the repair of the roof.