The Homestead Exemption Is Another Advantage Of Buying A Home In Florida
You may have heard a lot about the protections of Florida’s homestead laws, and about how strong they are compared to many other states. In fact, many people buy property here with the intended purpose of taking advantage of our homestead laws. But what are those laws and when do they apply?
What is the Homestead Exemption?
Florida law makes the equity in your homestead completely safe from creditors. With some exceptions, which we will discuss below, this means that if you have a judgment or lawsuit against you, or you owe any type of money, the creditor cannot take your home to force you to satisfy the judgment.
Of course, you could lose your house if you specifically agreed to mortgage your house, the way you would agree to do when you take out a mortgage, and in some cases, when you don’t pay homeowners or association dues.
Other than that, all creditors can do is lien your house, so that they get paid when the house sells. Creditors cannot foreclose on you, force you out of the house, and then have it sold to pay their debts.
There are some requirements to get these benefits. You must have lived in Florida for at least 40 months before the full homestead protection kicks in. Your property also must be smaller than half an acre, but if you live in a rural environment, the law lets you have up to 160 acres (your real estate attorney will know if your property qualifies as rural). In some cases—like to be eligible for bankruptcy protection—you will need to have lived in the property for 1,215 days.
The good news is that, even if you don’t meet these requirements, you still likely will not lose your home as you can often get a generous exemption, which may be enough to protect all the equity in your home.
Money in the Bank
The homestead exemption is so powerful that it even protects money in the bank that is generated from the sale of a homestead if it being held with the intention of purchasing another homestead in the near future. Of course, if you are doing that, it may be in your best interest to keep the money in a separate account so as not to commingle the funds with non-homestead moneys.
To get the benefits of a homestead, the property should be homesteaded with the county or city. In the absence of an official homestead, the same protections apply if the property owner can show that he or she intended to live in the property as a homestead, or that the owner did indeed live in and treat the property as his or her homestead.
Just be careful as it is possible to “abandon” your homestead. For example, if you live somewhere else, or start renting out the property, a creditor can show that your otherwise homesteaded property is no longer homestead, and you may lose the generous homestead exemptions.
Talk to us about all the benefits of buying a home in Florida, and how to close on your perfect home. Contact the Tampa real estate lawyers at Gilbert Garcia Group, P.A.