Home Firm Overview Attorney Profiles Frequently Asked Questions Case Results Contact Us

Practice Areas

Business Law
Insurance Claims
Condominium & Homeowners Associations
Divorce & Family Law
Estate Planning
Motor Vehicle Accidents
Negligence & Slip & Fall
Real Estate
Construction Law
Debt Collection/Defense
For The Family Giveaway
Small Business Seminar Series 2017
Unsung Hero Award
Contact Us
Tell Me About Your Case:

12/06/12 It's The Law: Homestead Not Exempt for Thieves

It's The Law – Homestead Not Exempt for Thieves



I understand that homestead property is exempt from creditor claims. Does that include creditors pursuing a thief?


Article X, Section 4 of Florida's Constitution provides that homestead property is exempt from forced sale and liens except for payment of taxes and assessments, debts contracted for purchase, improvement or repair or other labor on the realty. This protection has been broadly and liberally applied by Florida courts. There is no dollar limit on homestead, although the Constitution does limit size.

In the 2001 case of Havaco of America, Ltd v Hill, Florida's Supreme Court re-affirmed the breadth of protection. Havaco won a $15,000,000.00 judgment against Hill on December 19, 1990 which became enforceable on January 2, 1991. Hill was a long time resident of Tennessee, but on December 30, 1990, he bought a home in Destin, Florida for $650,000.00 and later claimed it was exempt from the judgment creditor as his homestead. Federal Bankruptcy Court and Florida's appellate courts took turns deciding the merits of the competing claims by creditor and Hill.

All parties agreed that Hill had converted non-exempt assets into a homestead for purpose of placing them beyond the reach of Havaco. Havaco argued the conversion was an effort to defraud Havaco and should not be allowed. Florida's Supreme Court reviewed previous Florida cases as part of its decision in Hill.

The Court noted that it had previously rejected the State's effort to forfeit a criminal's residence after conviction for racketeering and bookmaking. In that earlier case, the State argued that forfeiture was warranted because the homestead was used in the course of racketeering activity. The Court rejected the argument on ground that the Constitution protected the homestead from "forced sale."

In a similar case, the State sought forfeiture of homestead under the Florida Contraband Forfeiture Act after the owners were arrested for selling marijuana and a search of their home revealed drugs, paraphernalia and a marijuana growing operation. The State argued that the home was used as an instrumentality of the drug operation or was acquired with drug money. The Court ruled that activity did not fall within any exception to the Constitutional homestead protection.

Florida's Supreme Court followed its earlier decisions and ruled that even though Hill used homestead to convert non-exempt assets to exempt homestead, the Constitution protected the homestead and the creditor was left without remedy. However, homestead is not bullet-proof. In certain cases, Florida courts have found an equitable lien on homestead in favor of a creditor.

Most of the equitable lien cases involve investment of funds in homestead which were fraudulently or criminally obtained. If the creditor can show that the homestead was improved, mortgage paid or purchased with funds which were obtained by fraud or theft and can trace the proceeds directly from the fraud or theft to the purchase, mortgage payoff or improvement of homestead, the creditor can be awarded a lien equal to the amount of stolen money. But, the proof must be clear.

And, when a bad guy puts stolen money in a homestead, the courts will swing a heavy club. In a number of cases, the courts have confirmed that an innocent spouse is not protected from the wrongdoing of his or her spouse. If the homestead is the product of stolen or fraudulently obtained funds, the entire homestead is subject to an equitable lien and not merely the interest of the wrong doer.

And, the courts have even tiptoed into other areas to chip away at homestead protection. In the Gepwhich case, the appellate court found that homestead was not exempt from an alimony obligation that pre-dated purchase of the homestead because the owner had "unclean hands." The court went on to explain that the court would not sanction "such a blatantly defrauding scheme." As not earlier in this article, non-alimony creditors are not so fortunate.

The most recent exception to homestead protection came in the case of Hirchert Family Trust v. Hirchert. In that case, a husband and wife created a trust for estate planning purposes. It provided that when the first spouse died, their assets, which included the California residence, would be divided into a survivors trust and a residuary trust. The wife died and the marital home was divided with 75% placed in the residuary trust and the remaining 25% in the survivors trust. The husband became sole trustee of both trusts. The trusts provided that the husband was immediately entitled to all of the survivors trust, but only permitted to withdraw principal from the residuary trust when his other assets were fully dissipated.

The husband remarried and deeded the home to himself, even though his other assets were not fully dissipated. He sold the original marital home and eventually used the proceeds to purchase a home in Florida with his new wife and he later died. The successor trustee of the trusts discovered the husband's wrongdoing and pursued the Florida homestead. The trial court ruled that the property was exempt as homestead. The appellate court disagreed and held the husband's breach of fiduciary duty as trustee is constructive fraud warranting placement of an equitable lien over the Florida homestead.

Although Florida homestead protection is expansive, it does not protect ill gotten gains that can be traced directly to the homestead. If you are seeking recovery from a "thief", you should discuss the facts of your case with an experienced attorney without delay. Theft can be the key to unlocking homestead protection.

By: William G. Morris, Esquire

William G. Morris is an attorney with offices at 247 North Collier Boulevard on Marco Island, Florida. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney.

Questions for this column can be sent to: William G. Morris, e-mail: wgmorrislaw@embarqmail.com or by fax, (239) 642-0722 or

The Marco Island Eagle

Other articles of interest can be viewed at our website, www.wgmorris.com.

Categories: Articles