How Can I Protect My House in Florida?
By: Barry E. Haimo, Esq.
May 18, 2015
HAIMO: In Florida, your home is afforded massive protection from creditors. There are, of course, a few exceptions to this rule. If you have a home, you want to make sure that you qualify for Homestead. There are several requirements. If you satisfy these requirements, you will have protection of the home by way of the Florida Constitution.
The Florida Homestead Exemption is one of the most powerful asset protection tools available to people in the United States. Subject to few exceptions, under Article X, Section 4 of the Florida Constitution, no creditor can force the sale of your home in order to satisfy a judgement.
To understand how the Florida Constitution protects your home with the Homestead Exemption, here is a brief explanation about how creditors can satisfy your open accounts with assets from your estate after you pass away.
Creditors and the Probate Process
During the process of probate, one of the responsibilities of your personal representative is to settle your open accounts with creditors.
When a person dies with debt, open accounts with creditors usually must be settled before the assets in the estate can be distributed to the heirs. This allows creditors to recover some or all of your debt, since debt does not pass down to your heirs.
In many cases, the debt may be greater than the sum value of the estate. Otherwise, this is called “insolvency”.
In the former circumstance, a creditor can file a claim with the probate court. If their claim is successful, the creditor can force the sale of assets in your estate in order to satisfy your debt. In other states, one of the assets that may be targeted in this way is your home.
Florida’s Homestead Exemption
In Florida, creditors cannot force the sale of your home. Even if your estate is declared insolvent, subject for few exceptions, creditors will not be able to liquidate your home in order to settle your debts.
Requirements for Homestead Protection
Homestead protection doesn’t just refer to single family houses. In the past, Florida has extended homestead protection to include mobile homes, condominiums, and manufactured homes.
However, the Constitution does specify requirements in order for your property to qualify for Homestead Exemption.
The Constitution defines a 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.” Furthermore, to qualify for homestead protection:
- The debtor must be a permanent Florida resident.
- The homestead must be his or her primary place of residence.
- The property must be owned by a “natural person”. Properties in the name of LLC, corporations, partnerships, or irrevocable trusts do not qualify
There are a few other exceptions to the rule that the Florida Constitution specifically mentions. The homestead exemption does not protect property against tax liens, homeowner association liens, or mechanic’s liens issued to enforce payment for labor and materials furnished to your home.
To fully utilize Florida’s Homestead Exemption and other powerful estate planning tools to protect your life’s work, you should consult with a skilled and knowledgeable estate planning attorney.
Barry E. Haimo, Esq.
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