Florida Homestead Law

The Florida homestead law is a state constitutional provision that provides two protections for homeowners:

1. Protection from Judgment Creditors. This prevents the forced sale of a homestead to satisfy a money judgment.
2. Property Tax Exemption. This reduces property taxes owed to the county.

The law protects all types of property, including single-family homes, condominiums, mobile homes, and manufactured homes.

What Is Homestead Property in Florida?

A Florida homestead property is the primary home of an individual. If the homestead is in a city, it must be 1/2 acre or less. If it’s in an unincorproated county, it must be 160 acres or less.

All contiguous land counts as homestead property, even if the contiguous land has separate legal descriptions and parcel numbers.

A home owned by an LLC, corporation, irrevocable trust, or other legal entity does not qualify as a homestead property because these legal entities are not natural persons.

Homestead Protection from Creditors

The most important aspect of Florida homestead law is the protection from forced sale by creditors. A Florida homestead is protected from lawsuits and judgments. A creditor cannot force the sale of your home or get a lien against it.

Florida law exempts an unlimited amount of equity in homestead property.

Exceptions to Florida Homestead

Here are a few important exceptions to the Florida homestead protection:

1. Voluntary Liens: If you fail to pay your mortgage, the lender can foreclose on the property.
2. Taxes: Unpaid taxes can lead to a tax lien and eventual sale of the property.
3. Mechanic’s Liens: Unpaid contractors or workers who have performed work on the property can file a lien against a Florida homestead.
4. Homeowner Association Fees: The HOA can get a lien and foreclose on the homestead.

Requirements for Florida Homestead Protection

To qualify for Florida homestead protection from creditors, you must be a natural person, personally occupy the property, and have a beneficial interest in the property.

There is no minimum time to live in a Florida home to qualify for homestead protection.

A person can only have one Florida homestead. A person may maintain a second residence in another state if the Florida house is their primary home.

Filing a declaration of domicile is not required for homestead protection.

Homestead Tax Exemption

The Florida homestead exemption can reduce the amount of property taxes you owe. There are two parts:

• Reduction of Assessed Value: Florida homeowners can exempt up to $50,000 of their property’s assessed value from taxation. The first $25,000 applies to all property taxes, including school district taxes. The second $25,000 applies to non-school taxes if the property’s assessed value is between $50,000 and $75,000.
• Cap on Annual Increase: The homestead law caps the annual increase in the assessed value of the homestead at 3% or the Consumer Price Index (CPI), whichever is less.

How to Qualify for the Homestead Exemption

Here are the rules to qualify for the Florida homestead exemption:

• You must own the property: You must own the property as of January 1.
• You must reside in the property: The property must be your permanent residence or the permanent residence of your dependent.
• You must file an application: You must file an application by March 1.

Fraudulent Conveyance

The transfer of money into a Florida homestead cannot be attacked as a fraudulent conveyance so long as the money used to purchase or improve the home was not originally obtained through fraudulent conduct.

Some judgment debtors living in other states will move to Florida to purchase a Florida homestead to protect their hard-earned money from collection by a creditor.

How to Protect Proceeds from the Sale of Florida Homestead

Proceeds from the sale of your residence that qualifies as a Florida homestead are protected after the sale if you demonstrate an intent to reinvest the proceeds in a replacement homestead.

You must show that you are actively looking for a new home. Evidence of an active home search includes a record of online searches, property inspections, and using a buyer’s real estate broker.

You also should not co-mingle the homestead proceeds with funds from other sources. However, you may spend money from this account on any item or reason during your home search.

Homestead Bank Account

A homestead bank account refers to segregating sale proceeds into a new and separate bank account. These accounts are often referred to as “homestead accounts.” The term homestead account is a convenient description of a segregated account, but there are no official bank account designations with that name.

Time Limits

There is no time limit on investing homestead proceeds in a new Florida homestead. The Florida Supreme Court has only said that “whether funds received from the sale of a homestead are invested in another homestead within a reasonable time must be determined from the facts and circumstances of each case.”

Courts have found a timeframe of four months to be reasonable, and even one or two years to be reasonable in particular cases. However, courts have also found four years and ten years to be too long.

What Happens When the Homeowner Dies?

Florida law protects the home of a deceased homeowner even after their death. A person’s homestead is not included in probate. It cannot be liquidated to pay a decedent’s creditors.

If the homeowner’s heirs or trustees sell the homestead, the sale proceeds will pass to the decedent’s probate heirs and trust beneficiaries.