Florida is widely known for its most generous homestead exemptions laws in the United States. The main benefit of those laws is that they prevent individuals from becoming homeless in the event of forced sale “before and at death”. The Florida Constitution (Article 10, section 4) provides that homestead property in Florida is “exempt from forced sale under process of any court”. Thus, the homestead legislation allows individuals to register their real property as “homestead” which makes such property unreachable to creditors. If the judgment is obtained against the owner of homestead property, Florida homestead exemption laws provide that the holder of such judgment will not be able to enforce it against the property designated as “homestead”. This protection also extends to certain heirs who inherit homestead after the death of the owner. (Garber)
Unlike similar legislation in other states, Florida homestead laws do not determine the maximum value of the property registered as “homestead”. The protection of the law extends to the entire value of property although there are certain limits on total acreage: half an acre is the maximum size of area in municipality and 160 acres in other parts of the state. (Garber)
There are certain exceptions to Florida`s homestead exemption legislature. The homestead status of the property will not prevent the enforcement of pre-existing liens, mortgages, tax liens, or mechanic liens, e.g. the cost of services of a contractor who improved or repaired the property. Furthermore, a pre-existing civil judgment will take precedence if it was recorded in the county where homestead is located before the acquisition of property. One of the risk factors is the joint ownership of property with a person who does not reside on the property. For example, a creditor of co-owner of property, who is non-resident, can enforce a judgment against the property. (Alper) At the same time, all exceptions to homestead laws must be “strictly construed in favor of claimants and against challengers” (In re Ehnle, 124 B.R. 361, 363 (Bankr. M.D. Fla. 1991)) Additionally, homestead exemption law in Florida does not have an absolute scope because it is a state law subject to Supremacy Clause of the United States Constitution, which means that federal law has a superior power over any provision of homestead legislation.
The primary purpose of homestead exemption, as provided by the Florida Constitution, is to protect the owners and their families against the deprivation of such essential means of livelihood as homestead, even when the deprivation is based on just demands, such as the enforcement of debtor-creditor obligations.
Another purpose behind homestead exemption rules is to create a favorable legal environment for the large investments in real estate and encouragement of asset transfers, which, in turn, would boost the growth of real estate market. Probably the most powerful tool of Florida`s homestead exemption laws is that they allow for practically unlimited monetary protection of the assets. In order to protect the value of the residences, a Florida resident can invest millions of dollars in real estate. Under Florida law, a person can invest assets in the homestead and protect his money under highly favorable exemption regime, even if it is clear that the transfer of assets in homestead property had the purpose of hiding money from creditors. (Alper)
Alper,J, Homestead Protection, Alper Law, Creditor Protection for Individuals & Business. Web. 24 June 2015
Florida Constitution, Art. X, Section 4(a)-(b)
Garber, J, A Guide to Florida Homestead Laws, Understanding ownership of property. Web. 24 June 2015
In re Ehnle, 124 B.R. 361, 363 (Bankr. M.D. Fla. 1991)