The asset protection benefits of Florida’s homestead exemption law are favorable to those who qualify. The Miami-Dade County Circuit Court recently had to decide whether the asset protection provided by homestead exemption depends on the timing of the filing of the Notice of Homestead Affidavit.
The case involved a wife’s attempt to enforce a $735,000 foreign judgment against her husband for past-due child support. The judgment had been awarded pursuant to an Ohio divorce proceeding in 2006. The husband moved to Florida, and the wife sought to domesticate the Ohio judgment and enforce it under Florida law.
The Miami-Dade County Circuit Court domesticated the foreign judgment and allowed the wife to execute on the husband’s assets to enforce the judgment. The wife then attempted to force a sheriff’s sale of two properties in Miami-Dade County.
When husband learned of the proposed sheriff’s sale, he filed to prevent the sale and also filed a Notice of Homestead Affidavit. He claimed that he had been using the properties as his homestead since March 2006, and accordingly, that the properties were protected from levy and execution under Article X, Section 4, of the Florida State Constitution. That Section provides:
(a) 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, the following property owned by a natural person:
(1) a homestead, if located outside a municipality, to the extent of 160 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.
Note: For a general background on the asset protection benefits of Florida homestead exemption, see my articles on What is a Florida Homestead?, Claiming Florida Homestead, and Florida Homestead Acreage Limitations.
The trial court denied the husband’s motion to strike the sheriff’s sale of the property, but entered a stay to allow the husband to appeal to the Miami-Dade County Circuit Court. On appeal, the Miami-Dade County Circuit Court had to decide whether the properties were protected from levy as the husband’s homestead.
The wife claimed that the properties were not entitled to the asset protection benefits of homestead exemption since the husband did not file the Notice of Homestead Affidavit until after the judgment lien had already attached to the property. In other words, she claimed that her judgment lien had priority over the Florida homestead protection laws since she filed it before the husband filed the Notice of Homestead Affidavit.
Creditors’ rights often depend on timing. The law generally rewards creditors who file promptly by giving them priority over creditors who drag their feet. Since each creditor has the opportunity to put the other creditors on notice of its claim, it makes sense to favor those who do so quickly. States have enacted notice statutes that provide that creditors who file first get priority over those who lag behind.
But does this rationale apply to homestead exemption? Unlike a creditor with a secured claim against an individual, the protection of Florida homestead exemption depends on use of property as a homestead. In recognition of this, Florida law provides that it is the place of actual residence of a party, and not the filing of a claim for homestead exemption, that determines whether the property will qualify for homestead protection.
As applied to this case, the filing of the husband’s Notice of Homestead Affidavit was not determinative of whether he was entitled to homestead protection. The Court stated:
The filing of the husband’s Notice of Homestead Affidavit, wherein he makes a claim for homestead exemption, is not the determining factor of whether or not the property is the husband’s homestead and it matters not if the Notice of Homestead Affidavit was filed after the judgment lien. The question of whether the property constitutes homestead can be answered only upon proof of the husband’s homestead.
Since the Circuit Court did not have any evidence on whether the husband actually used the property as his homestead, it couldn’t rule on whether or not the homestead exemption applied. The Court remanded the case for an evidentiary hearing on whether the husband did in fact use the property as his homestead. If so, the property would be entitled to homestead protection regardless of fact that the husband’s Notice of Homestead Affidavit was filed after the wife’s judgment lien.
DiGorgio v. DiGorgio, 35 Fla. L. Weekly D2638b (Fla. 3rd Cir. Ct. Dec. 1, 2010)
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