Even Courts Get the Homestead Rules Wrong Sometimes (especially non-probate courts)
It is a well-worn cliche among Florida estate planning lawyers that the concept of "Homestead" is a "legal chameleon," in which there are three different meanings for the term. The first is the tax exemption that homeowners are entitled to. The second is the "devise and descent" rules – in which there is a prohibition on how a home may pass at death if the owner is survived by a spouse or a minor child.
The third way in which the term "homestead" is used is the protection of your homestead from creditors. I've written about this before. Once again, I'd like to re-quote the relevant portion of the Florida Constitution.
Article X, Section 4, of the Florida Constitution 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 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; (b) These exemptions shall inure to the surviving spouse or heirs of the owner.
To simplify, if you owe someone money not related to your home, they can't take your home. It's a bit more complicated than that, but that's the basic rule.
Of course, there are always wrinkles.
In the recent Third District opinion filed in Beltran and Beltran v. Kalb (see link for full text),the facts are as follows
Evaristo and Carmen were married, jointly owned a home, and had a daughter, Grisel. In 1990, Evaristo and Carmen got divorced. As part of the divorce agreement Carmen retained "sole and exclusive" occupancy of the home, and Evaristo was supposed to deed his interest in the home to Carmen.
Evarsito never executed the deed, so, technically, retained a tenancy-in-common interest in the home, where Carmen and Grisel continued to live. During the time, Evaristo racked up some debts, and had a recorded judgement against him.
Carmen died in 2007. At the time of Carmen's death, she was unmarried, and Grisel was an adult. This is not a case about devise and descent, but as I said earlier, protection from forced sale of the homestead to satisfy creditors.
Here is what happened next:
- February 2007 - Carmen passed away.
- March 2007 - A sheriff's levy was recorded on the home for Evaristo's debt
- April 2007 - Evaristo quit-claimed his interest in the property to Grisel.
- May 2007, a third party purchased Evaristo's interest in the home at a sheriff's sale.
Evaristo and Grisel filed a motion to set aside the sale, which the lower court denied, because it found that Grisel had "failed to carry her burden of proof by offering testimony to demonstrate the decedent (Carmen Beltran) was the head of household for homestead purposes."
In effect, the lower court said that in order for the homestead to be protected from Evaristo's creditors, then Grisel had to prove that Carmen was a "head of household."
There's only one problem with this. That's not the law. It used to be (sort of), but not since 1984.
For some reason, the trial court was concerned with determining who supported Carmen while she lived in the home, and whether Carmen and Grisel lived there together, as a “family unit.” As the 3rd DCA instructs, prior to 1985, the homestead protection from forced sale benefitted owners who were the "head of a family."
The current and correct standard was that Carmen lived in the home and made it her residence, even after Evaristo left, and therefore, it was her homestead.
If it was Carmen's homestead at the time of her death, then than status inures to Grisel, Carmen's daughter. I'm not so sure why it matters though, as the real issue is Evaristo's creditors.
The appellate court found that Evaristo's interest was also protected from creditors. As the Florida Constitution says, the protection from force sale (creditors) "shall be limited to the residence of the owner or the owner's family." Grisel, Evaristo's daughter continued to live in the property continuously, and was supported by her father financially. Even though he did not live there, the property maintained its status as protected Homestead because his family (his daughter) still did.
I'd like to point out that this case did not come from the probate division. The probate judges work with Homestead issues like this every day and are well versed in the intricacies. Even though Carmen died, this was not a probate case, in that it was a motion to set aside the sale of property.
Do the probate judges occassionally get the issues wrong? Of course. A recent court case stated that "It has been said by those who labor in the area, that 'the leading cause of cerebral herniation among probate lawyers, real estate lawyers, circuit court judges sitting in probate, and appellate judges reviewing their work is the study of the legal chameleon also known as homestead." Cutler v. Cutler, 2007 WL 601866.
But would a probate judge have gotten this case wrong in this manner? I don't think so.
