IN RE LEICHT

HAINES, Bankruptcy Judge.

Bruin Portfolio, LLC ["Bruin"] appeals the bankruptcy court's order avoiding its judicial lien on Gregory and Sara Leicht's ["Leicht"] residence. After considering carefully Bruin's challenges to the order, we affirm.

Jurisdiction

The bankruptcy court's lien avoidance order is a final order. See In re Weinstein, 217 B.R. 5, 6 (D.Mass.1998), appeal pending; see also East Cambridge Sav. Bank v. Silveira (In re Silveira), 141 F.3d 34 (1st Cir. 1998)(court of appeals reviewing lien avoidance order without discussion of jurisdiction); see generally In re Saco Local Dev. Corp., 711 F.2d 441, 442-48 (1st Cir.1983)(Breyer, J.)(discussing bankruptcy appellate jurisdiction); Fleet Data Processing Corp. v. Branch (In re Bank of New England Corp.), 218 B.R. 643 (1st Cir. BAP 1998)(same). We have jurisdiction under 28 U.S.C. § 158(a)(1) and (b).

Scope of Review

Bruin's challenge to the bankruptcy court's lien avoidance order raises legal issues exclusively. We review de novo the lower court's legal conclusions. See Krikor Dulgarian Trust v. Unified Management Corp. Of Rhode Island, Inc. (In re Peaberry's Ltd.), 205 B.R. 6, 7 (1st Cir. BAP 1997). See also LaRoche v. Amoskeag Bank (In re LaRoche), 969 F.2d 1299, 1301 (1st Cir.1992).

Background

The Leichts, Chapter 7 debtors, executed a $272,000.00 promissory note to Home National Bank of Milford on July 8, 1988. Bruin eventually succeeded to the bank's interest by assignment via the Federal Deposit Insurance Corporation.

The Leichts purchased a home in Westborough, Massachusetts on February 13, 1992, and, pursuant to state statute, recorded a declaration of homestead for the property on October 12, 1994.

Bruin initiated suit on its promissory note in state court and obtained a writ of attachment, recorded as a lien against the Leichts' real estate on April 4, 1995. The state court issued judgment in Bruin's favor on August 30, 1996.

The Leichts filed a voluntary Chapter 7 petition on April 7, 1997. They scheduled their Westborough residence, held in joint tenancy, but did not claim an exemption in the property on Schedule C. They did, however, indicate their choice to utilize Massachusetts state exemption rights. On June 26, 1997, the Leichts filed a motion seeking to avoid Bruin's lien under § 522(f) of the Bankruptcy Code,1 asserting that the lien impaired their homestead exemption. Bruin opposed the motion, pointing out, among other things, the Leichts' failure to schedule their exemption claim. The Leichts quickly filed a motion to amend their Schedule C to set forth the homestead exemption claim on July 16, 1997.

On August 12, 1997, after a nonevidentiary hearing, the bankruptcy court granted the Leichts' lien avoidance motion. This appeal ensued.

Discussion

Bruin's attack on the bankruptcy court's lien avoidance order proceeds on two fronts. First, it argues that the court misapprehended the substance of the Massachusetts homestead exemption, leading, in turn, to a misapplication of § 522(f). Second, it urges that, if § 522(f) operates to avoid its lien, the statute effects a "taking" offensive to the United States Constitution's Fifth Amendment. We will address each argument in turn.

I.

Section 522(f) and the Massachusetts Homestead Statute

a. The Lay of the Land

We begin by noting that, under § 522(b), debtors in bankruptcy may elect to utilize either the Bankruptcy Code exemptions set forth in § 522(d) or the exemptions provided by their state of residence together with those provided by federal, nonbankruptcy law. If a state has "opted out" of the federal exemption scheme, its resident debtors are restricted to the latter option.2 Massachusetts permits its debtors to elect between the state and federal exemption alternatives. The Leichts selected the Massachusetts exemption scheme and claimed the Massachusetts statutory homestead exemption.3

b. The Statutory Geography

1. The Massachusetts Homestead Statute

We begin by examining the Massachusetts homestead statute. It provides:

§ 1. Right to acquire; exemptions; definitions

Mass. Gen. Laws ch. 188, § 1 (Supp.1998).

A property owner "acquire[s]" the homestead by declaration, either in the deed by which the debtor obtains the property, or by a subsequently recorded instrument. Id. § 2. Chapter 188 also provides that, in case of marital separation, the probate court may order use and occupation of the homestead by the spouse who is not the declared "owner" of the homestead, minor children of the marriage, or both. Id. § 3 (1991). The homestead "continue[s] for the benefit of a surviving spouse and minor children" following the declared owner's death. Id. § 4. Mortgagees and encumbrancers of the homestead realty are protected against a subsequent homestead declaration, see id. § 5, but the homestead estate will prevail as against a third party who acquires the equity of redemption on execution. See id. § 6. The homestead may be terminated by deed or recorded declaration signed by the record homestead owner and his or her spouse. See id. § 7.

2. Section 522(c)

Although Bruin's appeal raises § 522(f) lien avoidance issues, § 522(c) is critical to our analysis. It establishes the post-bankruptcy relationship between "property exempted" and debts that arose (or that are treated as having arisen) before the commencement of the bankruptcy case:

§ 522(c). See Davis v. Davis (In re Davis), 105 F.3d 1017 (5th Cir.1997)(describing operation of § 522(c) vis-a-vis state exemption provisions), rehearing granted en banc, 131 F.3d 1120 (5th Cir.1997).4

3. Section 522(f)

Section 522(f)'s operation is at the center of this appeal. It provides debtors the ability to avoid (i.e. to reduce or eliminate) certain liens, including judicial liens, as is Bruin's, that encumber exempt property. It states:

§ 522(f). See In re Silveira, 141 F.3d at 38 (explaining operation of § 522(f)'s lien avoidance formula); see generally David Gray Carlson, Security Interests on Exempt Property After the 1994 Amendments to the Bankruptcy Code, 4 Am. Bankr.Inst. L.Rev. 57 (1996); Scott Everett, Debtors' Delight? Bankruptcy Reform Act of 1994: How Revisions to 11 U.S.C. § 522(f) Affect Debtors' Ability to Avoid Liens Which Impair Texas Personal Property Exemptions, 26 Tex. Tech. L.Rev. 1331 (1995).

c. Mapping the Issues

1. Bruin's View

Bruin argues that, properly applied, § 522(f) cannot operate to avoid a judicial lien on Massachusetts homestead property if the lien is in consequence of a debt contracted prior to the acquisition of the debtor's homestead estate. Its contention pivots on Massachusetts' limited definition of "homestead," the manner in which homestead rights are acquired in the State, historical state law treatment of the homestead, and the date that the Leichts became indebted to Bruin's predecessor in interest. Bruin contends that, because the Massachusetts statute expressly withholds homestead protection against debts contracted for before the homestead is "acquired," a lien (such as its own) enforcing collection of such a pre-acquisition debt cannot "impair" the exemption within the meaning of § 522(f).5

Bruin characterizes the Massachusetts homestead as an "estate," distinct from the real estate to which it relates. Thus, in Bruin's view, Massachusetts does not really provide a state law exemption in real estate at all. It extends protection only to the "homestead estate," and the homestead estate, by definition, is valued by subtracting pre-acquisition contract claims (and liens enforcing them) from the value of the underlying real estate. According to Bruin, because the Leichts borrowed from its predecessor before they acquired their homestead estate by recorded declaration, its lien is immune from any homestead-exemption-based bankruptcy attack.6

Bruin points to In re Fracasso, 210 B.R. 221 (Bankr.D.Mass.1997)(Boroff, J.) in support of its position. In re Fracasso sustained a Chapter 7 trustee's objection to the debtor's Massachusetts homestead exemption claim on the ground that pre-declaration contract debts numbered among the prepetition liabilities. The In re Fracasso court concluded that there is no conflict between the state law exemption and § 522(c) because § 522(c) only limits the liability of "property exempted" to enumerated prepetition debts, and because "property exempted" under the Massachusetts homestead statute excludes the value of the homestead to the extent of pre-acquisition contract debts. 210 B.R. at 227. Stated another way, the In re Fracasso court concluded that pre-acquisition (or predeclaration) contract debt comes off the top of the debtor's residential equity, before the determination of what "property" the debtor "has exempted." See 210 B.R. at 225 ("[Section] 522(c) was intended to apply only after there had first been an unrestricted definition of exemption under § 522(b)."). Moreover, In re Fracasso considers its approach to be consistent with the Supreme Court's recognition in Owen v. Owen that "`[n]othing in [the Code] limits a State's power to restrict the scope of its exemptions; indeed, it could theoretically accord no exemptions at all.'" In re Fracasso, 210 B.R. at 227 (quoting Owen v. Owen, 500 U.S. 305, 308, 111 S.Ct. 1833, 114 L.Ed.2d 350 (1991)).

2. Appellee's Position

The decision below is consistent with the bankruptcy judge's prior published ruling, see In re Boucher, 203 B.R. 10 (Bankr.D.Mass.1996)(Queenan, J.)(overruling trustee's objection to homestead exemption), is in harmony with the conclusions drawn by three other Massachusetts bankruptcy judges, see In re Mills, 211 B.R. 1 (Bankr.D.Mass.1997)(Kenner, J.)(overruling objection to exemption and holding that, within the bankruptcy case, the Massachusetts homestead exemption is effective against all prepetition creditors, including those with contract claims predating the homestead declaration); In re Griffin, 208 B.R. 608 (Bankr.D.Mass.1997)(Hillman, J.)(same); In re Whalen-Griffin, 206 B.R. 277 (Bankr.D.Mass.1997)(Feeney, J.)(same), and, accords with the more recent determination by the United States District Court for the District of Massachusetts. See In re Weinstein, 217 B.R. 5 (Harrington, J.)(affirming ruling of bankruptcy court, Hillman, J., overruling creditor's objection to exemption, praising the reasoning of In re Whalen-Griffin and In re Boucher).

This majority view proceeds on the following analytical premises: (1) § 522(b) permits a debtor's use of state law exemptions; (2) once exemptions are invoked in a bankruptcy proceeding, § 522(c) dictates the extent to which exempt property may be called to answer for prebankruptcy debts; (3) § 522(c) generally provides that, after bankruptcy, exempt property "is not liable" for prebankruptcy debts except debts secured by tax liens or other valid, unavoided liens and debts for taxes, alimony/support/separate maintenance, and certain debts stemming from bank failures; (4) § 522(c) preempts state laws that define the operative effect of exemptions more restrictively, or more expansively, than it does; and, (5) because the Massachusetts homestead statute purports to limit the operative effect of the homestead exemption against pre-acquisition contract debts, it is preempted by § 522(c). See In re Whalen-Griffin, 206 B.R. at 290-292; see also In re Weinstein, 217 B.R. at 7 (following Whalen-Griffin); In re Mills, 211 B.R. at 2 (same); In re Griffin, 208 B.R. at 608 (same).

Thus, it would follow, as the lower court concluded here, that a judicial lien that encumbers a Massachusetts homestead can be avoided under § 522(f)'s formula, even a judicial lien that secures a pre-acquisition contract debt. This is so because such a lien "impairs" the homestead exemption within the meaning of § 522(f). In the lower court's view, Bruin's lien "impairs an exemption to which [the debtors] would have been entitled but for the lien itself." Owen v. Owen, 500 U.S. 305, 310-11, 111 S.Ct. 1833, 114 L.Ed.2d 350 (1991). And the federal "policy disfavor[s] the impingement of certain types of liens upon exemptions, whether federal- or state-created." Id. at 313, 111 S.Ct. 1833. The decision below rests on the premise that a state law exemption, when invoked in bankruptcy proceedings, becomes the platform for bankruptcy law remedies (e.g., § 522(f) lien avoidance) and for the federal fresh start (e.g., § 522(c)), and, therefore, a state may not — even by way of exemption definition — override the "competing or limiting policies" codified in the federal statute. Owen, 500 U.S. at 313, 111 S.Ct. 1833.

d. An Analytical Foundation

At first blush, the issues create a circular conundrum. If the Code permits a debtor's invocation of state exemptions, and if the state exemptions are defined in such a way that they simply do not operate against one or more categories of prepetition claims, so that such claims (and resulting liens) hover without the sphere of a debtor's exemption protections, how can a judicial lien securing such a claim "impair" the exemption so as to be vulnerable to § 522(f) avoidance? To answer the question we must discern the outer limits of a state law's ability to control an exemption's operative characteristics in the bankruptcy universe.

As In re Fracasso's construct makes plain, between state exemption law and federal bankruptcy policy there is much space for disagreement. Well-informed courts may reach conclusions light-years apart.

In the end, however, we are convinced that, although through § 522(b) Congress provided states with the opportunity to define the category and content of exemptions resident debtors may invoke in bankruptcy (going so far as to authorize states to "opt out" of the federal exemption scheme), it defined the operative effect of exemptions in bankruptcy through §§ 522(c) and (f). We reject In re Fracasso's conclusion because it rests on a fundamental mis-perception regarding the extent to which Congress truncated its deference to state exemption policy through § 522(c)'s preempting provisions. We embrace, instead, the In re Boucher/In re Whalen-Griffin/In re Weinstein construct. As a consequence, those provisions of the Massachusetts homestead statute that limit the exemption's vitality against certain categories of claims cannot hold sway against conflicting Code provisions.

Our conclusions follows from § 522(c)'s context as well as from the practical fact that, however the homestead may function as a state law matter, to defer to state law so far as Bruin asks would import into bankruptcy proceedings alien notions that frustrate federal aims. It follows also from the complementary conclusion that such deference in the bankruptcy process would not square with state law objectives. In re Whalen-Griffin and In re Boucher are our polestars.

e. Charting the Boundaries of the Bankruptcy Debtor's Exemption

We begin by answering the question of exactly what property is "exempted" by a Massachusetts debtor who invokes the state homestead exemption in bankruptcy.7 Is congressional deference so great, or are the exceptions set forth in Mass. Gen. Laws ch. 188, § 1 so integral a part of the state exemption's essence, that the exceptions must operate as part-and-parcel of the exemption when it is invoked in a bankruptcy case? In re Boucher answers the question succinctly:

203 B.R. at 12-13. See also In re Weinstein, 217 B.R. at 7; In re Whalen-Griffin, 206 B.R. at 281-82. Stated differently, "states can determine the nature and amount of property that can be exempted, but not the types of debts to which the exemption applies." In re Whalen-Griffin, 206 B.R. at 282. (citing In re Scott, 199 B.R. 586, 593 (Bankr.E.D.Va.1996) for the conclusion and In re Conyers, 129 B.R. 470, 472 (Bankr. E.D.Ky.1991) for the proposition that federal law determines types of debts collectible from exempt property after bankruptcy).8

Section 522(c) completes the Code's treatment of nondischargeable debts, complementing inter alia §§ 523(a), 524(a)(3) and 727(b), by providing that exempt property is immunized against liability for prebankruptcy debts, including "some, but not all, nondischargeable debts." In re Davis, 105 F.3d at 1020.9 The basis of Bruin's claim is, as prepetition claims go, unexceptional. As a claim arising from a promissory note, its lien status aside, it is entitled to no special treatment or priority, and Bruin does not assert that it fits within any § 523(a) discharge exception. Yet, Bruin would have it that, merely because of the date that the Leichts undertook their contract obligation to Bruin's predecessor, it is entitled to defeat their homestead exemption in bankruptcy. Simply put, that result would contravene Code provisions prescribing the treatment of unexceptional prepetition claims and work a result at odds with state law objectives.10

Against this federalized scheme of exemption protections, a product of the congressionally-conceived fresh start, Bruin's counter-arguments cannot prevail. Bruin contends that the unique character of the Massachusetts homestead "estate," with its statutory exception for pre-acquisition contract claims, permissibly frustrates § 522(c)'s mandate. In Bruin's view, the "property exempted" by a bankruptcy debtor cannot transcend the exemption's built-in limitations. It argues that the homestead's definitional limitations inhere in the homestead estate's very essence. As an estate, rather than as an operational concept like an "exemption right," the homestead's scope is immutably fixed. Thus, the "property" that can be "exempted" by a debtor within the meaning of § 522(c) is similarly limited, and, Bruin argues, there is no conflict between § 522(c) and state law.

Granted, there are hoary Massachusetts cases that describe the homestead exemption under statutory predecessors to Mass. Gen. Laws ch. 188, § 1 in ways that characterize it as a unique estate, derivative of rights in land. See, e.g., Silloway v. Brown, 94 Mass. 30 (1866)(widow's homestead rights are not dependent on dower); Mercier v. Chace, 93 Mass. 194 (1865)(widow entitled to homestead in addition to dower); Richards v. Chace, 68 Mass. 383 (1854)(debtor holds premises by "two different tenures": fee estate and homestead). But these cases neither address nor control bankruptcy issues. The Massachusetts cases explicate interaction of principles that are peculiarly products of state law. The interplay they describe developed during an era when the rights of one spouse (read wife) without record title were particularly vulnerable to claims of creditors and successors to the other spouse's (read husband's) title. See, e.g., Weller v. Weller, 131 Mass. 446, 447(1881)(once wife acquires a homestead estate, subsequent actions creating title to an undivided part of the premises in a stranger will not defeat her homestead unless she has released her rights in accordance with the statute); Kerley v. Kerley, 95 Mass. 286, 287 (1866)(homestead is "an estate indeterminate in its duration, and which may continue for the joint lives of the possessor and his wife."); Silloway, 94 Mass. at 32 (homestead is titleholder's "estate for life, and for the additional term of the continuous subsequent occupation of his widow or any of his minor children").11

Like more conventional exemptions, Massachusetts' homestead has always been a mechanism to "protect the family home" from enforcement of judgments, to carve out humane protections for a destitute "owner and his family." Jordan B. Cherrick, The Homestead Act: An Important Law to Protect the Family But a Law in Need of Reform, 1980 Mass. L.Rev. 175. And, more to the point, the cumbersome operation of the state exemption (within or without bankruptcy) may well be attributable to archaic concepts that the modern statute still embodies. See id. at 176 ("Problems like the estate concept and the declaration requirements have thrown the homestead into obscurity.").

As a consequence, we decline Bruin's invitation to recognize the Massachusetts homestead as so different in character from other exemptions that § 522(c)'s fresh start mechanism cannot operate to enlarge its protections. Thus, the conclusion that the Massachusetts law "conflicts" with the Bankruptcy Code's congressionally-intended operation, and must give way to the Code's preemptive powers, is unavoidable. See e.g., Rini v. United Van Lines, Inc., 104 F.3d 502, 504 (1st Cir.1997)("[A] state statute is void to the extent it is in conflict with a federal statute."); Summit Inv. & Dev. Corp. v. Leroux, 69 F.3d 608, 610-14 (1st Cir.1995)(applying bankruptcy preemption analysis); see generally In re Newport Offshore Ltd., 219 B.R. 341, 349-55 (Bankr.D.R.I.1998)(explicating bankruptcy preemption principles and collecting authorities).

Our conclusion should not be startling. In the exemption arena, federal courts have, time and again, concluded that the federal fresh start principles promulgated in § 522(c) override state law exemption limitations, even definitional limitations. See, e.g., Owen, 500 U.S. at 313-14, 111 S.Ct. 1833; Davis, 105 F.3d at 1022-23; In re Maddox, 15 F.3d at 1351; Wachovia Bank & Trust Co., N.A. v. Opperman (In re Opperman), 943 F.2d 441, 443 (4th Cir.1991); In re VanZant, 210 B.R. at 1014-15; In re Whalen-Griffin, 206 B.R. at 290-92; In re Boucher, 203 B.R. at 13-14; In re Scott, 199 B.R. at 591-93; In re Conyers, 129 B.R. at 472.12 Indeed, the 1994 amendments to § 522(f) make it clear that Congress intended a debtor's exemptions (whether state or federal law in their source) to operate in particular, federal-law-ways to advance the policies embodied in the bankruptcy fresh start.13

Moreover, it is not startling that bankruptcy law operates this way in the exemption context. Throughout, bankruptcy law relies upon state law to define and establish the fundamental rights and relationships that arrive, with the debtor, at the bankruptcy court's door. It is upon these rights and relationships that federal principles operate to render results consistent with bankruptcy policy (results often contrary to state law). See e.g., § 547(c)(3)(B)(purchase money security interest perfected within 20 days escapes avoidance as preference); Fidelity Fin. Servs., Inc. v. Fink, ___ U.S. ___, ___, 118 S.Ct. 651, 653-56, 139 L.Ed.2d 571 (1998)(concluding that § 547(c)(3)(B)'s 20 day perfection period overrides state law provisions that give relation-back treatment to perfections accomplished in more than 20 days). See also e.g., § 541(c)(1)(certain interests of the debtor become property of the estate notwithstanding state laws that restrict transfers by debtor or that modify or terminate the debtor's ownership interests upon bankruptcy); §§ 1123, 1142 (plan and debtor/entity must conform to sections' requirements notwithstanding applicable nonbankruptcy law); § 1322(c)(1)(bestowing home mortgage cure rights on debtors up to the date of the foreclosure sale, "notwithstanding applicable nonbankruptcy law").14

f. Lien Avoidance Under § 522(f).

The foregoing analysis breaks our conundrum's circularity. Having reached the conclusion that § 522(c) preempts the Massachusetts homestead exemption's exception for pre-acquisition contract claims, § 522(f)(1)'s application is straightforward. There is little left to say.

Bruin's lien is a "judicial lien" within the meaning of the Code. See § 101(36)("`[J]udicial lien' means lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding[.]") And, given our earlier conclusion, there is no remaining dispute that Bruin's lien "impairs" the Leichts' exemption and that application of § 522(f)(2)(A)'s formula calls for its total avoidance. See supra note 5.

II.

Does § 552(f)'s Application to Bruin's Lien Effect an Unconstitutional Taking?

Bruin bears on beyond the statutory argument. It asserts that § 552(f)'s operation against its lien works an impermissible, uncompensated taking of its lien. We disagree.

a. Undertaking Takings Analysis

The Constitution expressly invests Congress with power to enact national bankruptcy legislation: "The Congress shall have Power . . . [t]o establish . . . uniform Laws on the subject of Bankruptcies throughout the United States." U.S. Const. Art. I, § 8. Accordingly, Congress has broad authority to enact laws that shape, impact, and alter the contractual and property interests of debtors and creditors. See generally Hanover Nat'l Bank v. Moyses, 186 U.S. 181, 22 S.Ct. 857, 46 L.Ed. 1113 (1902).

Nevertheless, "[t]he bankruptcy power is subject to the Fifth Amendment's prohibition against taking private property without compensation." United States v. Security Indus. Bank, 459 U.S. 70, 75, 103 S.Ct. 407, 74 L.Ed.2d 235 (1982). See also Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 589, 55 S.Ct. 854, 79 L.Ed. 1593 (1935)("The bankruptcy power, like the other great substantive powers of Congress, is subject to the Fifth Amendment."). As it relates to this case, the Fifth Amendment provides that Bruin's "private property" shall not "be taken for public use, without just compensation." U.S. Const. amend. V.

b. Section 522(f) Takes on Bruin's Lien

Before we reach the meat and bones of takings analysis, we must make a point that simplifies our task considerably: In the case before us, § 522(f) is being applied to a lien that arose after the statute's enactment (or effective date).15

There is no dispute that the impact of § 522(f) on Bruin's judicial lien is prospective. Lien avoidance powers have been part of the federal bankruptcy laws since 1898. See 11 U.S.C. § 107 (1898). Section 522(f), enacted as part of the Bankruptcy Reform Act of 1978 became effective on October 1, 1979. See 95 Stat. 598, § 402 (1978). The most recent amendment to § 522(f) became effective October 24, 1994. See 103 Stat. 394, §§ 303, 304, 310 (1994)(clarification of subsection (f) impairment calculation, changes to tools of trade provision, and increased protection of alimony and child support liens); id. § 702 (effective date is enactment date of October 22, 1994). Bruin sued the Leichts to collect on its note on March 24, 1995, and obtained its lien, the "property interest" assertedly taken from it, when it recorded its attachment writ on April 4, 1995. Thus, Bruin is left to argue that its lien was impermissibly "taken" by operation of § 522(f)(1), even though the section, including the latest, clarifying revisions to it, was on the books well before the lien arose.

In this way, Bruin's argument places us a step beyond the takings challenge to § 522(f) addressed by the Supreme Court in Security Indus. Bank. There the Court concluded that Congress intended § 522(f)(2) to operate only prospectively, not retrospectively.16 It declared:

459 U.S. at 82, 103 S.Ct. 407 (quoting N.L.R.B. v. Catholic Bishop of Chicago, 440 U.S. 490, 507, 99 S.Ct. 1313, 59 L.Ed.2d 533 (1979))(footnote omitted). The Court cited a non-taking's case, Holt v. Henley, 232 U.S. 637, 34 S.Ct. 459, 58 L.Ed. 767 (1914), for the rule that courts should construe statutes to apply prospectively to limit their impact on pre-established property rights. See Security Indus. Bank., 459 U.S. at 79-80, 103 S.Ct. 407. In laying forth this rule, the Holt Court stated: "We do not need to consider whether or how far in any event the constitutional power of Congress would have been limited." Holt, 232 U.S. at 639-40, 34 S.Ct. 459.

Strictly speaking, Security Indus. Bank did not declare that § 522(f)'s prospective application would not amount to a taking, although some courts have found the question (and its answer) implicit in the Supreme Court's opinion. For example, the Seventh Circuit stated in In re Thompson:

867 F.2d 416, 422 (7th Cir.1989) (citations omitted). See also In re Jacobs, 154 B.R. 359, 361 (Bankr.S.D.Fla.1992.)

Like others, we take Security Indus. Bank's teaching as a strong signal, though short of an express holding, that prospective application of § 522(f)'s lien avoidance provisions does not offend the Fifth Amendment. Taking the teaching as less than gospel, however, would not change our conclusion. Assuming that Security Indus. Bank has not foreclosed the inquiry, we can readily determine that the statute has not effected an impermissible taking of Bruin's lien.17

For Bruin to succeed we must be satisfied that: (1) the application of § 522(f) to his lien is governmental action; (2) that his judicial lien is "property" of a kind that the Fifth Amendment protects; (3) that the application of § 522(f)(1) to the his judicial lien actually took a property interest from him; and (4) that Congress went "too far" when enacting § 522(f)(1), weighing the burden to Bruin of lien avoidance against the public benefit achieved through the congressional preservation of the homestead exemption.18 Even assuming that Bruin could satisfy the other elements required to demonstrate an unconstitutional taking, we are convinced that the extent and character of the property involved (i.e., the lien) were circumscribed by the federal lien avoidance remedy at the time the lien was created and, therefore, that § 522(f)'s operation did not take any property from Bruin viewed under the third element of our takings inquiry.

Though a protected interest under the Fifth Amendment, Bruin's lien is no more than what the law defined it to be at the time it arose. And here is the Achilles heal of Bruin's takings challenge. The lien was born subject to the Leicht's right to avoid it pursuant to § 522(f)(1). Ruling on a uniformity challenge to bankruptcy exemptions, the Supreme Court early recognized the defining role exemption laws play vis-a-vis liens created after their enactment. It is, the Court noted,

Hanover Nat'l Bank, 186 U.S. at 189, 22 S.Ct. 857 (quoting In re Deckert, 2 Hughes, 183, Fed. Cas. No. 3,728).19 Other courts have observed this simple principle in the context of a § 522(f) challenge. See In re Thompson, 867 F.2d at 422 ("[L]ien avoidance is not a taking when it is authorized before the creditor makes the secured loan in question. . . ."); Dickens v. Snellings (In re Snellings), 10 B.R. 949, 956 (Bankr.W.D.Va. 1981)("[T]hose liens created after the enactment of the Bankruptcy Reform Act of 1978 . . . are implicitly subject to the debtor's power to avoid liens on exempt property under section 522(f).").

Whether or not Bruin was aware of it at the time,20 Bruin's judicial lien was, at its inception, an interest in property subject to and limited by the Leicht's § 522(f) avoidance powers. This is the insurmountable hurdle that Bruin's challenge to § 522(f)'s prospective effect cannot clear. See Radford, 295 U.S. at 589, 55 S.Ct. 854 ("The [congressional bankruptcy] power over property pledged as security after the date of the Act may be greater than over property pledged before[.]"); Student Loan Mktg. Ass'n v. Riley, 104 F.3d 397, 404 (D.C.Cir.1997)("Purely prospective burdens do not present the same constitutional difficulties as retroactive ones as the affected parties can take measures to protect themselves against, or at least mitigate, the otherwise resulting loss."); In re Howard, 11 B.R. 954, 957 n. 16 (Bankr.N.D.Ind.1981) ("Because retrospective laws interfere with the legally induced and settled expectations of private parties to a greater extent than prospective measures, retroactive measures have traditionally been subjected to stricter scrutiny.").21

Therefore, protestations that § 522(f) "completely destroyed the property interest that Bruin had in the [Leichts'] Residence" fail. Bruin's lien, its "property interest," arose subject to the Code's lien avoidance mechanisms.22 Section 522(f)(1), as applied here, was (and remains) the positive law context in which Bruin's lien exists. That law's application to the lien, and the resulting avoidance of the lien through the Leichts' bankruptcy remedy, effected no diminution in, no "taking" of, Bruin's rights.

Conclusion

For the reasons set forth above, we conclude that the court below properly applied §§ 522(c) and 522(f) to avoid Bruin's judicial lien on the Leichts' Massachusetts homestead and that the avoidance of Bruin's lien did not amount to a constitutionally impermissible taking.

The bankruptcy court's order is AFFIRMED.