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Sunday, April 16, 2023

New Decision Is a Welcome Clarification of Florida Waiver of Homestead by Deed Issues [Florida]

Fla. Stats. Section 732.7025 provides that if a spouse transfers their interest in property that is or will be homestead property of their spouse by using specific language in the deed, then the transferring spouse waives all homestead rights in such property. Thus, for example, their spouse can convey the subject property at death without the limitations on devise that would otherwise apply when there is a surviving spouse.

That statutory provision is a safe harbor that avoids any question when a waiver will occur. Nonetheless, a waiver by deed can occur outside of that statute. Until now, there has been a fair amount of ambiguity about when a deed will constitute a waiver of homestead rights by a transferring spouse.

In Stone v. Stone, 157 So.3d 295 (4th DCA 2014), a husband and wife jointly owned homestead property. They then deeded the property to each other as tenants in common, preliminary to subsequently deeding it into separate qualified personal residence trusts. The trial court and the appellate court concluded this was a waiver by the wife of her rights in husband's share of the homestead, per language in the deed that the transferring spouse "grants, bargains, sells, aliens, remises, releases, conveys, and confirms" the property "together with all the tenements, hereditaments, and appurtenances thereto belonging or in anywise appertaining." Thus, it would appear that a deed conveying a spouse's entire interest in the subject property can, at least in certain circumstances, constitute a valid waiver.  

What are those circumstances? Note the use of the terms “hereditaments” and “releases” in the Stone deed. In Habeeb v. Linder, 2011 WL 613392, 36 FLW D300 (3rd DCA 2011), withdrawn by 64 So.3d 1275, a husband and wife owned homestead property as tenants by the entireties. During the marriage, title was transferred by husband and wife via a warranty deed to the husband. The deed did not have any language of waiver or homestead. The wife died first, and the issue arose whether the husband had homestead rights to the homestead. The trial court found the deed to constitute a valid waiver of homestead rights by the husband, and Florida's 3rd District Court of Appeal affirmed, noting the use of the term “hereditaments” in the deed involved in that case. The court noted that hereditaments means inheritance rights, and thus by signing a deed with that term in it, the wife waived all of her inheritance rights including her homestead rights. However, the 3rd DCA eventually withdrew its opinion. As such, the case has no precedential value. While Stone also had the hereditaments language, the appellate decision did not provide that it was the reason for its finding of waiver (although the language was included in an excerpt from the subject deed). Thus, uncertainty remained after Stone as to what particular circumstances allowed for a waiver by deed. In 2023, much of this uncertainty was resolved. 

In Thayer and Jefferson v. Hawthorn, No. 4D22-244, 2023 WL 2903993 (4th DCA) Apr. 12, 2023), the 4th DCA, which had decided Stone, has now taken another bite at the apple. In Thayer, the subject deed signed by the transferring spouse did not have language of transfer of hereditaments nor language of release. In the search for language of waiver, the appellate court compared the deed in Thayer and the deed in Stone, and found the lack of hereditament and release language significant enough that the waiver found in Stone should not extend to the deed in Thayer. The appellate court also noted that the acknowledgement in the deed that the transferee trustees had “full power and authority to protect, conserve, sell, lease, encumber or otherwise to manage and dispose of the real property described herein” was not equivalent to a transfer of “all rights” under Fla.Stats. §732.702(1) that would give rise to a homestead waiver. Further, the court noted the burden on a party asserting waiver to sustain their position since “language waiving a constitutional right must be able to be clearly understood as waiving the right.” That Stone and Thayer were both promulgated by the 4th DCA effectively requires them to be read together and that Thayer acts as a clarification and modification of Stone with precedential authority. There is language in the opinion that suggests that if called upon to rule again on Stone that the court might not have found a waiver there when it said “[w]hile one may question whether the language in Stone was sufficiently specific to waive homestead, it is still more specific than the deed's language in this case.” Having concluded that the deed in Thayer was not a waiver, the court also concluded that the deed could not be corrected to treat it as a waiver based on external evidence of the parties’ intent, such as testimony of the estate planning attorney who was involved in the transfer by deed. 

Reading the case law together, it is a fair conclusion that specific language of release, waiver, or at least reference to transfer of hereditaments is now required in a deed for the deed to constitute a waiver by deed (except as waivers under Fla.Stats. §732.7025). Thayer is a welcome clarification on this issue. 

Interestingly, neither Thayer nor Stone discussed the fair disclosure requirements of Fla.Stats. §732.702(2). Perhaps the court presumed that the only item requiring disclosure was the subject property which was already described on the deed, the issue was not brought to the court’s attention, or full disclosure occurred but was not mentioned in the court’s opinions.

In preparing a deed of property that will remain homestead property of the transferor’s spouse, if a waiver of homestead rights is not desired, care should be taken to avoid language of waiver, release, ‘all rights,’ and assignment of hereditaments (and similar language).