In 2010, Patrick Sill had a $740,487.22 judgment entered against him. In October 2013, he sold his homestead and deposited his $458,696.67 share of the sale proceeds into a Wells Fargo investment account entitled “FL Homestead Account.” He did not deposit other assets into this account.
More than 1/2 of the account was invested in mutual funds and unit investment trusts. The judgment creditor sought access to the proceeds of the account. The trial court denied the creditor, and the 4th DCA has now affirmed that.
a. A debtor is permitted to sell a homestead and hold the proceeds for reinvestment for a reasonable time without losing the homestead creditor protection for those funds. The opinion quoted Orange Brevard Plumbing & Heating Co. v. La Croix, 137 So. 2d 201 (Fla. 1962) for the outlines of this continuing exemption:
“the proceeds of a voluntary sale of a homestead [are] exempt from the claims of creditors just as the homestead itself is exempt if, and only if, the vendor shows, by a preponderance of the evidence an abiding good faith intention prior to and at the time of the sale of the homestead to reinvest the proceeds thereof in another homestead within a reasonable time. Moreover, only so much of the proceeds of the sale as are intended to be reinvested in another homestead may be exempt under this holding. Any surplus over and above that amount should be treated as general assets of the debtor. We further hold that in order to satisfy the requirements of the exemption the funds must not be commingled with other monies of the vendor but must be kept separate and apart and held for the sole purpose of acquiring another home. The proceeds of the sale are not exempt if they are not reinvested in another homestead in a reasonable time or if they are held for the general purposes of the vendor.”
b. Noncash proceeds, such as a brokerage account, can be used for this purpose. The court noted “[n]o constitutional provision or statute limits how the proceeds of a sale must be held. Given the nature of homestead protection, a court should not apply the exemption in a way that encourages excessive speculation with the proceeds of a sale. There was no evidence that the securities in Sill's account were particularly risky and the funds were kept “separate and apart” from Sill's other funds.“
c. The court’s opinion did not address whether the time period between sale and this action was “unreasonable” for this purpose.
d. The court explicitly refrained from addressing whether any gains and profits from the brokerage account would also qualify for homestead protection.
BK ASSOCIATES, INC., f/k/a COASTAL INSULATION, INC., Appellant, v. SILL BROS., INC., PATRICK T. SILL, STEPHEN D. SILL, LISA D. SILL and BARBARA H. SILL, Appellees. 4th District. Case No. 4D14-3049. March 11, 2014