Homestead Protection From Fraud Judgments
An investor writes by email that he lost money in a fraudulent scheme for "gourmet coffee distribution." The bad guy says the investors can't touch his Florida homestead. The victim states that he read somewhere that creditors can put an equitable lien on a homestead if the creditor can a judgment based on fraud. He wants to know if he should sue the bad guy for fraud and put a lien on his house. In this case, I think the homestead would be totally protected even though the investor was defrauded.
The fraud exception to homestead is found in the Havoco case decided by the Florida Supreme Court. In that well-known decision, the Supreme Court said that fraudulent conversion of non-exempt assets into a Florida homestead cannot be reversed or undone, except that in the case of fraud or other egregious acts. When there are no fraudulent conveyances the fraud or egregious circumstances exception does not apply. The Florida Constitutional provisions on homestead protection includes exceptions for several claims including security instruments (mortgages) and construction type liens. There is no exception in the Constitution for civil claims based on fraud. Florida appellate courts previously have stated the homestead protection does not differentiate among claims so that judgments based on bad acts cannot force the sale of Florida homestead.
