Often, people with judgments entered against them want to sell their home and move to a different home in Florida. They are concerned whether they can buy a Florida homestead and receive proceeds from the sale of their existing homestead without subjecting either the new property or the homestead sale proceeds to their judgment creditor’s execution.The issue: Should I first close on the sale of my existing house and then buy a new homestead, or should I buy and move into a new homestead before selling the old house?

The general answer is: Sell first, buy second. If you sell your homestead you may protect the sale proceeds while you are searching for or waiting to close on a new homestead. The net sales proceeds from the sale of your house remain exempt under the homestead umbrella as long as the sale proceeds are segregated and identifiable. Many people open up a new bank account and deposit only their homestead sale proceeds in order to maintain segregation.

On the other hand, if you first buy a property with the intent of moving in to the property as your homestead at a late time, a recorded judgment will attach to the new property as soon as the title is recorded in the debtor’s name. The debtor’s intention to make the new property his next homestead will not afford homestead protection.

So, the solution is to first sell, or close on the sale, of the existing homestead; segregate the sale proceeds or hold the money at the title company; and then find or close on your new homestead. Remember, any money from the sale of the first house not invested in the new house loses its homestead protection as soon as you buy and move in to your new homestead.

About the Author

Jon Alper is a nationally recognized attorney specializing in asset protection planning. He graduated with honors from the University of Florida Law School and has practiced law for almost 50 years.

Jon and the Alper Law firm have advised thousands of clients about how to protect their assets from creditors.

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