Bankruptcy Trustee Attacks Homestead Purchase
The homestead protection afforded Florida residents is being tested in a Florida bankruptcy proceeding. The Florida Supreme Court, in the case of Havoco v. Hill, has held paying money to purchase a homestead property or applying funds to reduce the principal balance on a homestead cannot be reversed, set-aside, or undone on the grounds that the purchase or payment was a fraudulent transfers to avoid creditors. In the case of In re Potter, pending in the Middle District of Florida bankruptcy court, the bankruptcy trustee, Ms. Gene Chambers, has sued to recover approximately $300,000 which a debtor used to by a homestead approximately 18 months prior to filing bankruptcy on the grounds that the purchase was a fraudulent conveyance under Florida's fraudulent conveyance statutes. It will be interesting to see whether this court finds that the Florida Supreme Courts ruling in Havoco precludes this fraudulent transfer claim in bankruptcy, or whether the court ignores Havoco and applies a different legal standard.
Is this in the Orlando or Jacksonville division?
Thanks
A.J. Comparetto
If a receiver can show that money used to pay down or pay off a mortgage was derived from a fraudulant conveyance, can he have it reversed? If so, how would this affect the homestead exemption.
Would Havoco have any bearing if debtor sells their homestead at less than fair market value?
Given that the property is exempt in the first place can creditors unwind a transaction that sells homestead to family at cost to avoid foreclosure and loses any built-up equity. If such a transaction was unwound, wouldn't it put all the equity back into exempt property anyway??
Is there a case beyond Havoco that would be more on point?