Florida Asset Protection Law Blog | Attorney Jon Alper

A caller asked whether Florida's homestead protection protected against suit for failure to perform under contract to sell the house to a third party. The caller while unmarried had owned a homestead property in is own name. Subsequently, he decided to sell the homestead and get married. He entered into a contract to sell. A month later he got married and his spouse moved into the house as her permanent residence. Thereafter, he and his wife realized that the house was worth more money than the contract price so they decided to default under the husband's sale contract. They want to know if the buyer can get a judgment of specific performance to force sale of the house when the house is now homestead of the wife who was not party to the sales contract.

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This year the Florida legislature passed a new limited partnership act known as the Florida Revised Uniform Limited Partnership Act of 2005, as amended. The new law increases protection of limited partnership interest against judgment creditors. Until this point there had been some question whether the charging lien against distributions to a partner was the exclusive remedy available to a creditor, or whether a creditor could also foreclose the debtor's partnership interest or ask the court for other collection remedies. Section 620.1703 of the new partnership law states that the charging lien is the exclusive remedy of a judgment creditor of a partner. As stated previously on this blog, the term "partner" is defined by the new law to cover both a limited partner and a general partner.

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Generally speaking, if you find a new house you want to buy, or build, you may sell your current homestead and protect the new sale proceeds in a bank account until you close on the purchase of a new homestead. A Florida client asked me if he could, instead of selling his current homestead, rent the property until the new homestead was available and sell the current homestead just before he closed on the new house. The question was whether the current house would lose its Florida homestead protection if it were rented for income.

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One unresolved issue in common law of fraudulent conveyance concerns business profits or distributions from closely held corporations which are used to support the debtor's family. For example, suppose a judgment debtor supports his spouse and children with earning from his business corporation of which he is the chief executive and sole stockholder. The business pays the debtor a salary and profit distributions. The debtor deposits all salary and profit distributions into a bank account owned jointly with his non-working wife. The money in the account is used solely to support his wife and children. The salary is exempt because the debtor is head of household. The question is whether the deposits of corporate distributions to the joint checking account are fraudulent transfers of the debtor's corporate profits to the debtor and his wife.

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A client asked an interesting question about Florida's salary exemption. Florida Statute 222.11 exempts from creditors an unlimited amount of salary earned by a debtor who is head of household. A Florida resident is head of household if he provides more than 50% of the support for a dependent. The question was whether in determining the 50% support requirement all of the money used to support the dependent must come from salary earned by the debtor. Otherwise stated, if a debtor uses a combination of salary and investment income to provide 50% of a dependent's support is the salary itself still protected from creditor garnishment.

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A common asset protection question is what happens to homestead upon divorce. Typically, homestead property is owned jointly by husband and wife as tenants by entireties. Upon divorce, the tenants by entireties is broker and the homestead is owned by husband and wife as tenants in common. After one spouse moves out of the house the question arises as whether either spouse has homestead protection.

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