Posted on June 8, 2006 by Jonathan Alper

Exemption of Homestead Foreclosure Proceeds

I discussed the following case with a creditor attorney. A debtor loses his house at a foreclosure sale. The foreclosure sale price brings in enough money to pay off the mortgage and provide excess funds of $20,000. The funds are held temporarily in the trust account of the debtor's attorney. Next, the debtor files bankruptcy. The question is whether the excess funds from the sale are exempt.

Florida law protects the proceeds from the sale of a homestead so long as the debtor intends to reinvest the proceeds in a new homestead. No case has distinguished proceeds from a voluntary sale from foreclosure sale proceeds. Therefore, the foreclosure proceeds should be exempt if intended for a new homestead.

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Comments (2) Read through and enter the discussion with the form at the end
Gladstone Real Estate - December 29, 2007 3:24 PM

ITs amazing a house brought in more. The seller could have sold the house for him self.

madeline stern - April 3, 2008 8:56 AM

If a home is protected by the homestead act from judgement and the home is sold is the money from the ho9me still protected from judgement if the person wants to buy another home with it?

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