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Homestead Exemption Protects Homes from Creditors

Homes from Creditors

Pursuant to Article X, Section 4 of The Florida Constitution “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.”

While many states limit the amount a dwelling is protected under Homestead Exemption from creditors, Florida law protects the property completely.  Protection is granted as soon as the owners begin residing in the home and there is no additional paperwork to complete.  In order to qualify for the homestead exemption, the homeowner must reside in the residence and it must be the primary residence of the homeowner.  Properties owned by entities (i.e.; corporations, limited liability companies or revocable trusts) are not protected but may qualify under other Florida Law. 

Homestead exemptions can transfer from residence to residence as the owners move throughout Florida; however it can only be applied to the most current primary residence address.  The exemption will also apply to the living spouse or heirs in the event of the title holder’s death.

It is important to note that the homestead exemption does not offer protection in the case of a previous claim or lien in the same county prior to the purchase of the home.  Co-owners that do not reside in the home are also not protected under homestead exemption.   Furthermore, properties with tax liens, liens from homeowner associations, mortgage companies and homeowner construction liens are not protected.

In the case of bankruptcy, the Supremacy Clause of the U.S. Constitution overrides the Florida homestead exemption in the amount of protection.  A homeowner-debtor can claim the homestead protection to retain the equity of the primary home unless the homeowner petitioner has resided in the home for less than 1215 days before filing.  If so, then in Florida the equity of homestead exemption is limited to the first $125,000 if a single homeowner debtor or $250,000 for a husband and wife debtor. Consult an experienced asset protection and bankruptcy attorney to explain available options before declaring bankruptcy.

The homestead exemption referenced in this article should not be confused with the homestead tax exemption which is a separate real estate tax credit in calculating a homeowner’s annual real estate tax in Florida.

Please contact Ronald A. Luzim, Esquire in Coral Springs for all of your Florida asset protection and bankruptcy needs.