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Monday, February 06, 2006


Florida generally allows for the protection of an individual’s homestead from the claims of his or her creditors (although bankrutpcy law requires residence in Florida for an extended period of time to avail oneself of the full protection). A recent case illustrates what happens when someone sells their homestead with the intent of reinvesting the proceeds in a new homestead.

In Rossano v. Britesmile, Inc., 3rd DCA (December 28, 2005), a judgment creditor learned that a debtor planned to sell her homestead and to purchase a less expensive residence. The creditor served a writ of garnishment on the closing agent at the sale, and the trial court allowed the entire amount to be garnished.

On review, the appeals court noted that under Florida law, the proceeds of a voluntary sale of a homestead are exempt from creditor claims just as the homestead is, if the seller can show an abiding good faith intention prior to and at the time of the sale to reinvest the proceeds in another homestead within a reasonable time. However, any surplus of the funds from the sale that are not reinvested in another homestead lose their exemption.

Since it was presently unknown how much of the sale proceeds would be reinvested, the appellate court directed that the trial court should await the closing on the new home and then order payment to the creditor only of that amount which was not used in good faith for the new residence.

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