Florida Homestead Law

iStock_000001085149_ExtraSmallArticle X, § 4 of the Florida Constitution prevents most creditors from taking a Florida resident’s homestead to satisfy any debts. There are some exceptions to this rule as mortgage holders and lienholders who have provided services and value to your homestead may foreclose on those liens. The federal government may also foreclose a tax lien on homestead property as well as local governments who may sell tax deeds on your homestead for non-payment of property taxes to individuals who can later claim ownership to the property as they have paid the back taxes.

A Florida homestead is an effective estate planning device as there is no limit on the market value of the homestead and the only limitation is on its size and how it can be devised. (Think O.J. Simpson who had a $33.5 million civil verdict entered against him in California, who later moved to Florida and bought a mansion which was exempt from the claims of his judgment creditors).

The Florida Constitution provides that a homestead can be up to 160 acres of land and improvements if located outside a municipality and up to ½ an acre of contiguous land if located within a municipality. Additionally, if your property is later annexed into a municipality, that fact will not reduce the homestead size from 160 acres to the lesser ½ acre provision for property located within a municipality. In essence, your property will be grandfathered in unless you consent to the reduction of the size of your homestead.

Homestead planning is also affected by the provisions of the Florida Constitution and Florida Statutes, which prevent the devise of the decedent’s homestead if the decedent if survived by either a surviving spouse or minor child. If there is both a surviving spouse and lineal descendants of the decedent, the law in Florida provides that the surviving spouse may either elect to take a life estate with a remainder interest in the decedent’s descendants OR as of October 1, 2010, the surviving spouse may elect to take an undivided one-half interest in the homestead property as a tenant in common with the other one-half interest vesting in the decedent’s descendants in being at the time of the decedent’s death. The election must be made within six (6) months of the decedent’s death AND during the surviving spouse’s lifetime.

The recent legislative change offers a better alternative than the old method of just providing a life estate for the surviving spouse and a remainder in the decedent’s descendants. Since it creates a tenancy in common relationship between the surviving spouse and the decedent’s descendants, the law regarding tenancies in common will apply. The law applied to tenancy in common relationships is much clearer regarding the allocation of ownership expenses, valuation and division of sale proceeds. Additionally, the surviving spouse may partition the property pursuant to Florida Statutes Chapter 64, et.seq., which is NOT available to a life tenant. If partitioned, one-half of the net proceeds of the partition action would be payable to the surviving spouse with the other one-half going to the vested remaindermen.