Homestead Protection - Probate South Florida

FLORIDA HOMESTEAD PROTECTION

This area of law seems simple * but has enough complexities to it that a complete analysis should be considered before relying on limited information.
The following information is by no means complete and should not be relied upon, it is simply presented to give you some understanding of the many issues that arise in this area.

The Florida Constitution exempts homestead property from levy and execution by judgment creditors.

*The Florida Constitution defines homestead as one's principal place of residence up to one-half acre within a municipality and up to 160 contiguous acres in any county in Florida.

To qualify for Homestead Protection you must be a Natural Person who is a Permanent Florida Resident and your Property is your Primary Place of Residence.

What is homestead?

The general purpose of the homestead provisions in the Florida Constitution and the Florida Statutes has been to protect the family and the family home. However, neither the Florida Constitution nor the Florida Statutes contain a definition of homestead. Whether property constitutes homestead is not determined solely by the record title but also by the use of the property and the intention of the party in title as to the use of the property. For property to achieve homestead status it must meet three criteria.

First, under Article X, Section 4(a) of the Florida Constitution, the real property must be owned by a natural person (as opposed to corporations, partnerships, etc). Before the January 1, 1985 constitutional amendment, the owner had to be the "head of a family." After January 1, 1985, homestead property can be owned by a natural person without regard to the owner's status as the head of a family. The homestead protection applies to any interest of the natural person (e.g., fee simple, co-tenant, life estate, etc).

Second, Article X, Section 4(a)(1) of the Florida Constitution requires that the property be the residence of the owner or owner's family.

Third, the property must meet the size and contiguity requirements of the Constitution. Article X, Section 4(a)(1) of the Florida Constitution provides that real property is homestead:

if located outside a municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon, which shall not be reduced without the owner's consent by reason of subsequent inclusion in a municipality; or if located within a municipality, to the extent of one half acre of contiguous land, upon which the exemption shall be limited to the residence of the owner or the owner's family.

Property loses its homestead character if abandoned. Under Florida law, absence from the property claimed as homestead is not determinative of whether homestead has been abandoned; rather it is the owner's intent which is the critical factor. Since the question of abandonment involves a complex factual determination, an attorney should be consulted before relying upon an abandonment of homestead theory.

Exemption from Forced Sale by Creditors

Article X, Section 4(a) of the Florida Constitution provides in part:

There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty.

JUDGMENTS

The Florida Constitution provides that no judgment shall be a lien on the homestead of a judgment debtor. A title company may not insure a title without exception for any such judgment unless there is a judicial determination that the lien of the judgment did not attach during ownership by the judgment debtor. In some situations a title company may rely on the Homestead Affidavit and the Notice of Homestead under Section 222.01, Florida Statutes.

TAXES AND ASSESSMENTS

Article X, Section 4(a) of the Florida Constitution provides that liens for taxes and assessments are enforceable against homestead. Accordingly, title companies will not insure a title without exception unless provided with proof that all such taxes and assessments have been paid.
MORTGAGES
Whether a purchase money mortgage or not, a mortgage is enforceable against homestead. A mortgage is a voluntary lien and the foreclosure of it is not a prohibited "forced sale" under homestead law.

IRS LIENS

State homestead exemptions do not apply as against federal tax liens, and even a judicial determination will not prevent this type of lien from attaching to the homestead property.

EQUITABLE LIENS

The purpose of an equitable lien is to achieve right and justice considering the relations of the parties and the circumstances of their dealings. Despite the constitutional exemption from forced sale, Florida courts have recognized that equitable liens may be imposed against homestead property where the plaintiff can establish fraud or "reprehensible conduct" on the part of the beneficiary to the constitutional protection.

PROCEEDS FROM THE SALE OF HOMESTEAD

The homestead exemption has been extended to money derived from a judgment debtor's voluntary sale of homestead provided the owner intends to reinvest the funds in another homestead within a reasonable time.

CONVEYANCES TO THIRD PARTIES
All instruments conveying homestead property to third parties must recite the marital status of the grantor. If the grantor is married, the spouse must join in the execution of the instrument. Separate deeds purporting to convey the property cannot be insured.

INTERSPOUSAL CONVEYANCES

Article X, Section 4(c) of the Florida Constitution provides that property may be conveyed to create an estate by the entirety with the spouse.

TRUSTS A conveyance of homestead to a revocable trust does not destroy the homestead character of the property.

ANTENUPTIAL AGREEMENTS

Section 732.702, F.S. allows homestead rights to be waived by an antenuptial agreement in some cases. However, an antenuptial or postnuptial agreement should not be relied upon to eliminate the requirement of spousal joinder in a conveyance or mortgage of homestead property unless the validity and enforceability of the agreement has been judicially determined.

POWERS OF ATTORNEY

A conveyance or mortgage of homestead property accomplished by the exercise of a power of attorney or durable power of attorney specifically authorizing the conveyance or mortgage of real property may be relied upon.

WHEN CAN HOMESTEAD BE DEVISED

Article X, Section 4(c) of the Florida Constitution provides that:The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner's spouse if there be no minor child.
The constitutional prohibition as to devise of the homestead is mirrored in Section 732.4015, F.S.

Section 732.401, F.S. sets forth the manner in which homestead descends in the absence of a will or when not devised as permitted under Florida law or the Constitution. Section 732.401, F.S. provides that if not devised as permitted by law:the homestead shall descend in the same manner as other intestate property; but if the decedent is survived by a spouse and lineal descendants, the surviving spouse shall take a life estate in the homestead, with a vested remainder to the lineal descendants in being at the time of the decedent's death per stirpes.

DOES THE EXEMPTION FROM FORCED SALE INURE TO DECEDENT'S HEIRS OR DEVISEES
If property was decedent's homestead, the exemption from forced sale provided in Article X, Section 4(b) of the Florida Constitution inures to the surviving spouse or heirs of the decedent; thus decedent's creditors cannot reach it as long as those taking the property are members of the protected class. The class of persons to which Article X, Section 4(b) refers are those persons entitled to receive property under the laws of intestacy.
Where the property has judicially been determined to be decedent's homestead which descends to the heirs at law of the decedent, title companies generally insure without exception for the claims of decedent's creditors. Because decedent's creditors have an interest in the determination of whether the devised property was decedent's homestead or whether the property was devised to an "heir" in testate cases, due process requires that creditors receive notice of hearings to determine these issues.

In the absence of a judicial determination as to homestead, the title companies generally require that the creditor's claims be paid or barred prior to insuring title. In the alternative, the proceeds from the sale may be escrowed until the creditor's three month filing period has lapsed and proof is obtained that all claims were paid or that no claims were filed. Also summary administration may resolve the issue depending on the facts.
Tax liens or certified judgments against the heirs/beneficiaries when they are vested with title must be paid and estate taxes for the decedent must still be cleared.

Bankrupcy code has been revised and has far reaching effects on when homestead protection is allowed in a bankrupcy proceeding.

Law Office of Lawrence S. Silver

Telephones:
(305) 932-7797
(305) 333-1175