Protecting The Proceeds Of The Sale Of Homestead Property
Many of us who reside in the State of Florida know that homestead provides various protections to Florida Landowners. Florida’s homestead laws provide powerful tools to ensure that a family home is not the subject of a forced sale. What many people do not realize is, you can actually sell your homestead, and the proceeds from that sale are protected as well.
For example, assume Bob owns Blackacre, his homestead, which meets the constitutional acreage requirements. Unfortunately, Bob has fallen on hard times and lost his job as a result of the COVID-19 Pandemic. Resultantly, Bob has been unable to pay his mounting credit card debt and three credit card companies obtain judgments against Bob in excess of $20,000.00. Bob has owned Blackacre for a number of years and has substantial equity in Blackacre. However, Bob desires to relocate from rural Hernando County, to join his daughter and son-in-law in Boca Raton. Bob desperately wants to move but doesn’t want his creditors to seize his sale proceeds the second they touch his bank account.
Good news for Bob! Florida law extends homestead protection to the proceeds of a sale of homestead property. Provided that the proceeds are placed in a separate “homestead account,” are not commingled with the homesteader’s regular funds, and are held with the intent to purchase a new homestead within a reasonable time, the proceeds are protected. To break that down, the proceeds are protected if: (1) they are placed in a separate earmarked account, (2) the funds are not commingled with the homesteader’s regular bank accounts or income, (3) the funds are held for the purpose of acquiring another homestead, (4) for only a reasonable period of time.
Thus, the proceeds are protected for a reasonable time to acquire new property. What constitutes “a reasonable time” is dependent upon the facts and circumstances of each case.
Please note this article is for informational purposes only and should not be construed as legal advice. The facts and circumstances of each case, transaction, or matter can differ greatly. You should not use this information as a substitute for consulting with a licensed attorney. Barry L. Miller, P.A., and its attorneys, and staff, do not represent you unless you execute an engagement agreement with the Firm which confirms that representation.
Barry Miller Law is familiar with all aspects of real property law. If you, or someone you know, has legal questions concerning real estate, business or probate law, contact Barry Miller Law for assistance at 407-423-1700 or email us at info@BarryMillerLaw.com for a consultation.