Florida Homestead Exemption Not Affected By Commercial Operation on Land

Technology has made it easier for people to operate a business at or next to their primary residence. Operating a commercial venture on the property where you reside raises issues about Florida’s homestead exemption from creditors. The issue is whether a Florida resident can operate a commercial business on his homestead property without forfeiting homestead protection.

There have been several court decisions addressing this issue.  Courts agree that the Florida Constitution’s homestead exemption does not permit a homestead within a municipality to be used in part for a business. The Constitution limits the exemption for municipal residences to the owner and his family. Courts differ on whether a commercial use of a home in rural areas diminishes homestead protection. Some courts, mostly in south Florida, held that the restriction of homestead to the owner and family applies to all homestead properties, whereas other courts, mostly in the middle federal district of Florida, have permitted the homestead owner to operate a family business on a homestead outside municipal limits.

A recent bankruptcy court case (2009 WL 10722153) considered a situation where a Florida resident residing on a homestead outside a city constructed on his property both a commercial building used in his family business and another commercial building that was rented out to an unrelated tenant. Past courts withheld homestead protection when the property was used in part by a person not part of the debtor’s own family.

This court liberally applied homestead law and held that the entire property, including the two commercial buildings, was exempt because the property was used in part as the debtor’s primary residence. Partial use by an unrelated third party does not expose any part of the property to the owner’s creditors.