Selling Your Homestead In Florida
Under Florida law, a person may designate their primary residence as their ‘homestead,’ which conveys a number of financial protections, including an exemption from property taxes (up to a certain price point). When one is attempting to sell their homestead, however, it can raise questions that need to be answered before pulling the proverbial trigger.
Protected From Creditors
As one might imagine, anyone is permitted to sell their property if they wish to, for any reason. However, when one decides to sell their primary residence, it is often due to a pressing need – for example, a judgment against you – and it may be a relief to know that homestead properties in Florida come with certain protections. One of the most notable is the protections for the homeowner-seller against a judgment creditor – the Florida Constitution explicitly protects a homestead from any kind of forced sale, regardless of any obligations on the part of the owner.
It is important to keep in mind that state law only protects the homestead against creditors – if you have, for example, a tax lien against you, or a mechanic’s lien from a contractor, your homestead can and will be sold (if necessary) in order to fulfill the judgment. Even if your home is not foreclosed in order to pay these judgments, it can cause problems with the title if they are not cleared up – and a clouded title is a major impediment to selling your home.
Are The Proceeds Protected, Too?
The homestead itself is protected, but one might wonder if the proceeds of its sale are entitled to the same safeguards. The answer is yes, but only if the homeowners-sellers handle the proceeds in a very specific way. The sellers must:
- Have “good faith intent,” at the time of sale or beforehand, to invest the proceeds of sale in another homestead;
- Avoid mixing the proceeds with any other money you currently possess (either separately or as a couple); and
- Keep the funds “separate and apart,” retained explicitly for the purchase of another home.
If the sellers do not abide by these requirements, no protections exist. However, if they do, the protection will persist even if the sellers file a Chapter 7 or 11 bankruptcy. The state of Florida does not have an interest in making people homeless – but it does have an interest in preventing windfalls for those who have legal obligations to meet.
Contact A Tampa Real Estate Attorney
If you have decided to sell your homestead, it may be the best choice for your situation. However, if you have legal problems or other potential financial issues, know that you may have to clear them up before the transaction can proceed. If you have questions or concerns, contacting a Tampa real estate attorney from the Seward Law Office may be a good first step for you. Call our office today to schedule a consultation.