Keeping Your House in and Orlando Bankruptcy

12 Dec 2016

If you are worried about losing your home, an Orlando bankruptcy lawyer may be able to help. Florida actually makes it easier than most states to protect your homes from creditors or a bankruptcy court. Under the Florida Constitution, a person’s entire “homestead” is exempt from “forced sale” or judgment, subject to certain size restrictions. If the homestead is located in a city, the exemption is limited to one-half acre, but outside of a municipality the limit is 160 acres.

Court Rejects Homestead Exemption for “Unlivable” Property

A critical component of the homestead exemption is that it can only be used for the “residence of the owner or the owner’s family.” In other words, a vacation home or rental property is not protected by the homestead exemption. If you want the homestead exemption, you must prove that your property is a permanent residence.

A recent Chapter 7 bankruptcy case from Tampa illustrates how this limit to the Florida homestead exemption works in practice. In this case, the debtor and his family multiple houses on the same street. Up until 2012, he lived with his wife in one of the houses (House A). That year, the debtor and his wife separated and he moved into a double-wide trailer located on adjoining lot (House B).

But the debtor only remained at House B for 10 days. The trailer was infested with mold and required significant roof repairs. After vacating the property, the debtor moved back into House A.

That did not mean the debtor reconciled with his wife. The couple divorced and the wife received House A as part of the marital property settlement. She chose not to live in the house, however, and permitted the debtor to remain there while he completed repairs to House B.

The debtor filed for Chapter 7 bankruptcy in 2014. He was still living in House A at the time, yet he listed House B as his address. He then asked the bankruptcy court to lift an $85,000 judicial lien on House B held by a bank, claiming the homestead exemption.

The bankruptcy court rejected the debtor’s claim. The court noted the homestead exemption requires the debtor to “actually live” at the property “and intend to make it his permanent residence.” The court said it was “not clear” that was the debtor’s intentions at all.

The defendant has continued to live in his former marital home–House A–since 2012. In the intervening four years, the court noted the debtor has not claimed a homestead exemption for House B for property tax purposes. He does not receive mail at House B, nor is it listed as the address on his Florida driver’s license.

The debtor insisted that he “intends” to make House B his permanent residence but it is “unlivable” in its current state. The court said the debtor made a “compelling case” for House B’s state of disrepair. But this hurt, rather than helped, his claim for a homestead exemption. Dating back to the 19th century, Florida courts have held that “a lot never occupied as a dwelling place, and incapable of such occupancy, is not homestead within the Constitution.” And here, where there debtor only lived on the property for 10 days in the past four years, that was insufficient to establish occupancy for purposes of receiving a homestead exemption.

Get Help From an Orlando Bankruptcy Attorney

Keeping your home is understandably a priority when you are faced with insurmountable debts and feel bankruptcy is your only option. Rather than worry alone, you should speak with an experienced bankruptcy lawyer who can explain the homestead exemption and other aspects of the law. Contact the Law Office of K.Hunter Goff, P.A., at 407-898-8225, if you would like to schedule a free consultation today.

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