The Florida Bar
www.floridabar.org
The Florida Bar Journal
May, 2012 Volume 86, No. 5
The Impact of Co-ownership on Florida Homestead

by Joseph M. Percopo

Page 32

As the Florida Supreme Court noted in Snyder v. Davis, 699 So. 2d 999, 1001-02 (Fla. 1997), there are three kinds of homestead, all with one purpose: preserving the family home for its owner and heirs. The first kind provides homestead with an exemption from taxes.1 The second protects homestead from forced sale by creditors.2 The third delineates the restrictions a homestead owner faces when attempting to alienate or devise homestead property.3

Home ownership is not limited to a single person or family. Instead, homes may be owned in a variety of different forms, and in a down economy in which banks have stricter lending policies, co-ownership of property becomes even more common. Consequently, how does co-ownership of property impact the three kinds of homestead? This article examines the effects of owning property as tenants by the entirety, tenants in common, joint tenants with right of survivorship, and with life estates.

Tax Exemptions
Individuals who qualify for homestead can enjoy certain tax benefits. These benefits include a reduction in the assessed value of the homestead and a limit on the increase in property value of the homestead for ad valorem tax purposes. This article now examines how co-ownership of property affects these homestead tax exemptions.

$25,000 Tax Exemption — Fla. Const. art. VII, §6 states that “[e]very person who has the legal or equitable title to real estate and maintains thereon the permanent residence of the owner, or another legally or naturally dependent upon the owner, shall be exempt from taxation thereon . . . up to the assessed valuation of twenty-five thousand dollars….” Therefore, to qualify for this homestead tax exemption, the property owner “must be a permanent resident of Florida, must own and occupy the property as his or her permanent residence, and must hold legal or equitable title to the property.”4 F.S. §196.031 explains how the $25,000 exemption applies to co-owners, stating that the exemption “may be apportioned among such of the owners as shall reside thereon, as their respective interest shall appear.”

With regard to property titled as tenants by the entirety or as joint tenants with right of survivorship, when at least one of the co-owners qualifies for the homestead tax exemption, he or she is permitted the entire exemption amount.5 Therefore, as an example, if Abby, Ben, and Chuck own whiteacre with an assessed value of $60,000 as joint tenants with right of survivorship, and Chuck qualifies for the homestead tax exemption, Chuck then can use the entire $25,000 exemption. After which, Abby, Ben, and Chuck would only be responsible for the ad valorem taxes assessed on whiteacre at a value of $35,000.6 Chuck is not relieved from paying taxes even though he was the individual who qualified for the exemption; all three are responsible for the taxes.7 However, the property owners are free to agree among themselves who should pay what portion of the taxes due.

When property is titled as tenants in common between co-owners, the application of the $25,000 exemption gets slightly more complicated. “[T]he amount of the exemption may not exceed the proportionate assessed valuation of all owners who reside on the property” when the property is not held as tenants by the entirety or as joint tenants with right of survivorship.8 Therefore, if at least one co-owner of the property titled as tenants in common qualifies for the homestead tax exemption, he or she “may…claim as exempt [no] more than his [or her] interest in the property up to a total of $25,000.”9 To illustrate this scenario, assume that Abby, Ben, and Chuck own blackacre as tenants in common, each with a one-third interest:

1) Blackacre has an assessed value of $90,000, and Chuck is the only co-owner who qualifies for the homestead tax exemption. Chuck’s proportionate interest in blackacre is $30,000 ($90,000 X 1/3). Chuck can claim the entire $25,000 exemption because it does not exceed the value of his proportionate interest. After which, Abby, Ben, and Chuck will be responsible for the ad valorem taxes assessed on blackacre at a value of $65,000.

2) Blackacre has an assessed value of $60,000, and Chuck is the only co-owner who qualifies for the homestead tax exemption. Chuck’s proportionate interest in blackacre is $20,000 ($60,000 X 1/3). Chuck can only claim $20,000 of the $25,000 exemption because he cannot exceed the value of his proportionate interest. After which, Abby, Ben, and Chuck will be responsible for the ad valorem taxes assessed on blackacre at a value of $40,000.

It is important to understand that one co-owner qualifying for the homestead tax exemption can use the entire $25,000 exemption, but only if he or she possesses an interest that carries at least that value. Therefore, if mom and dad want to buy a home — which son plans to make his homestead — with son as tenants in common, they must be sure to give him a high enough percentage of ownership in order to take advantage of the entire exemption (or title the property as joint tenants with right of survivorship).

As for life estates and remainder interests, F.S. §196.041 states that a life estate is considered “equitable title to real estate” and may, therefore, qualify for the homestead tax exemptions.10 Section 196.031(1)(a) divides the application of the $25,000 exemption of co-owned property into two categories: 1) property that is owned as tenants by the entirety or joint tenants with right of survivorship, and 2) all other types of co-owned property. Therefore, life estates and remainder interests fall into the same category as tenants in common property. However, a co-owner holding a life estate has a present possessory interest in the property, and the co-owner with the remainder interest has a future interest with no present right to possess the property. Thus, the life estate holder has 100 percent of the current possessory interest permitting the life estate holder to use the entire exemption amount (provided, of course, it does not exceed the value of the property).11 The co-owner with the remainder interest would not be able to qualify for any homestead tax exemptions.12

Save Our Homes Tax Cap — In 1992, Florida adopted a state constitution provision known as the Save Our Homes (SOH) tax cap, which limits the annual increases to homestead property for ad valorem tax purposes.13 Fla. Const. art. VII, §4(d) provides:

(d) All persons entitled to a homestead exemption under Section 6 of this Article shall have their homestead assessed at just value as of January 1 of the year following the effective date of this amendment. This assessment shall change only as provided in this subsection.

(1) Assessments subject to this subsection shall be changed annually on January 1st of each year; but those changes in assessments shall not exceed the lower of the following:

a. Three percent (3%) of the assessment for the prior year.

b. The percent change in the Consumer Price Index for all urban consumers, U.S. City Average, all items 1967=100, or successor reports for the preceding calendar year as initially reported by the United States Department of Labor, Bureau of Labor Statistics.

Therefore, when a property owner qualifies for the homestead tax exemption under §6,14 the most his or her property value can increase for ad valorem tax purposes is three percent a year. However, anytime there is a “change of ownership,”15 the property must be assessed at just value the following January.16 In addressing the application of the SOH tax cap to co-owned property, F.S. §193.155(7) states that “[i]f a person received a homestead exemption limited to that person’s proportionate interest in real property, the provisions of this section apply only to that interest.” Thus, the application of the SOH tax cap to co-owned property differs from that of the $25,000 tax exemption under §6.

F.S. §196.031 specifically permits co-owners of property held as tenants by the entirety or as joint tenants with right of survivorship to use the entire $25,000 tax exemption and does not limit to an owner’s proportionate interest. Thus, when at least one of the co-owners of tenants by the entirety property or right of survivorship property qualifies for the homestead tax exemption, the entire property (100 percent of the value of the property) is subject to the SOH tax cap. For example, Abby, Ben, and Chuck own whiteacre as joint tenants with right of survivorship. Chuck qualified for the homestead tax exemption in the preceding year, and whiteacre had an assessed value of $90,000. This year, whiteacre’s value has doubled (100 percent value increase); however, because Chuck qualified for homestead and still qualifies for homestead, the assessed value for ad valorem tax purposes cannot exceed a three percent increase. Therefore, even though whiteacre is now worth $180,000, Abby, Ben, and Chuck would only be responsible for taxes on $92,700.17 When home values are skyrocketing, the SOH tax cap can save a significant amount of money on taxes.

When property is titled as tenants in common, the application of the SOH tax cap depends on which co-owners qualify for the homestead tax exemption and what percentage of ownership the qualifying co-owners possess. F.S. §196.031 limits the application of the $25,000 tax exemption to a co-owner’s proportionate interest,18 therefore, only the percentage of the co-owned property that qualifies for the homestead tax exemption will be entitled to the SOH tax cap. To illustrate this, assume that Abby, Ben, and Chuck own blackacre as tenants in common, each with a 1/3 interest:

1) Chuck qualifies for the homestead tax exemption and the SOH tax cap. In the preceding year, blackacre had an assessed value of $90,000; this year its assessed value is $180,000. The assessed value for ad valorem tax purposes will be $150,900:

• Abby and Ben’s interest does not qualify for the homestead tax exemption; therefore, their interests do not receive the SOH tax cap.

Ø 2/3 (Abby and Ben’s interest) X $180,000 = $120,000 assessed value.

• Chuck’s interest qualifies for the homestead tax exemption; therefore, his interest receives the SOH tax cap and cannot be increased by more than three percent.

Ø 1/3 X $90,000 (original value) = $30,000 X 3% (SOH tax cap) = $30,900 assessed value.

• Add all of the assessed values up.

Ø $120,000 + $30,900 = $150,900 assessed value.

2) Abby and Ben qualify for the homestead tax exemption and SOH tax cap. In the preceding year, blackacre had an assessed value of $90,000; this year, its assessed value is $180,000. The assessed value for ad valorem tax purposes will be $121,800:

• Abby and Ben’s interest qualify for the homestead tax exemption; therefore, their interests receive the SOH tax cap and cannot be increased by more than three percent.

Ø 2/3 (Abby and Ben’s interest) X $90,000 (original value) = $60,000 assessed value X 3% (SOH tax cap) = $61,800 assessed value.

• Chuck’s interest does not qualify for homestead; therefore, his interest does not receive the SOH tax.

Ø 1/3 X $180,000 = $60,000 assessed value.

• Add all of the assessed values up.

Ø $61,800 + $60,000 = $121,800 assessed value.

3) Abby, Ben, and Chuck qualify for the homestead tax exemption and SOH tax cap. In the preceding year, blackacre had an assessed value of $90,000; this year its assessed value is $180,000. The assessed value for ad valorem tax purposes will be $92,700:

• Abby, Ben, and Chuck’s interest qualifies for the homestead tax exemption; therefore, their interests receive the SOH tax cap and cannot be increased by more than three percent.

Ø 3/3 (Abby and Ben’s interest) X $90,000 (original value) = $90,000 assessed value X 3% (SOH tax cap) = $92,700 assessed value.

When less than all of the co-owners are going to qualify for the homestead tax exemption, the ownership interest of those owners who do qualify makes a big difference in the assessed value of the property for ad valorem purposes. Therefore, it is extremely important to keep ownership percentages in mind when titling property as tenants in common if the co-owners want to maximize the application of the Save Our Homes tax cap.

A co-owner with a life estate is able to take advantage of the SOH tax cap, as long as he or she qualifies for the homestead tax exemption.19 The life estate holder that qualifies for the homestead tax exemption will be able to apply the SOH tax cap to the entire value of the co-owned property because he or she has a 100 percent current possessory interest. However, the co-owner with the remainder interest cannot qualify for any homestead tax exemptions.20

Bringing the Tax Exemptions Together — Whether property is titled as tenants by the entirety, joint tenants with right of survivorship, tenants in common, or a life estate, the co-owner who can qualify for the homestead tax exemption21 can also qualify to use some, if not all, of the $25,000 homestead tax exemption and Save Our Homes tax cap. Any co-owner of property held as tenants by the entirety, joint tenants with right of survivorship, or a life estate may use the entire amount of the $25,000 tax exemption and apply the SOH tax cap to the entire value of the property. However, in no situation can the $25,000 tax exemption amount exceed the total value of the property. When the property is held as tenants in common, the co-owners may use an exemption amount up $25,000, but the amount cannot exceed the value of the interests of those co-owners who qualify for the homestead tax exemption, and only the percentage of the property that qualifies for the homestead tax exemption will receive the benefit of the SOH tax cap.

These concepts are likely to have the largest impact in situations in which families jointly own property, especially in situations where parents are helping their child in a property purchase. If parents and their child title property as joint tenants with right of survivorship and the child qualifies for the homestead tax exemption, then he or she will be able to use the full $25,000 tax exemption and apply the SOH tax cap to the entire value of the property. If parents and their child title the property as tenants in common, they need to keep in mind that the child’s ownership percentage will determine how much of the $25,000 tax exemption may be applied and how much of the property value will receive the SOH tax cap. The tax savings can be significant, so proper consideration is deserved. Parents who are concerned with giving their child a greater property interest than the child is actually paying for can consider using a promissory note signed by their child (and recorded) to protect parents’ interest and still allow their child to take advantage of the homestead tax benefits.

Creditor Protection
Florida has been a popular choice to take up residency for many individuals because of the expansive creditor protection afforded by the homestead laws in this state.22 This expansive protection stems from the purpose of homestead: to preserve the family home.23 The protection of homestead property from the forced sale by the creditors of the owner is based on the provisions of Fla. Const. art. X, §4, which states:

(a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, filed or other labor performed on the realty, the following property owned by a natural person:

(1) a homestead, if located outside the municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon, which shall not be reduced without the owner’s consent by reason of subsequent inclusion in a municipality; or if located within a municipality, to the extent of one-half acre of contiguous land, upon which the exemption shall be limited to the residence of the owner or the owner’s family.

Pursuant to the Florida Constitution, in order to qualify for the homestead creditor exemption, three conditions must be satisfied: 1) acreage limitations, 2) residency requirements, and 3) ownership requirements.24 Provided all three of these conditions are satisfied, creditors of the person claiming the homestead creditor exemption will not be able to force sale of or place a lien on the homestead property.25 This article now examines how co-ownership of property affects the homestead creditor protection.

Tenants by the Entirety — Only married couples can own property as tenants by the entirety,26 and there is a presumption that real property acquired during marriage is owned as such.27 This form of ownership treats married couples as one unit — each spouse having an undivided interest in the property.28 Provided either spouse qualifies for the homestead creditor exemption, the property will be afforded protection from either spouse’s creditors.29 However, upon dissolution of marriage, unless the divorce decree makes one spouse a complete owner or provides terms granting one spouse exclusive possession of the home,30 the spouses become tenants in common31 subject to the rules discussed below.

Tenants in Common and Joint Tenants with Right of Survivorship — When multiple unmarried individuals buy property intending to be co-owners, the property is usually held as tenants in common or as joint tenants with right of survivorship.32 Unless specific language is used indicating “survivorship rights,” tenants in common is the default form of co-owned property in Florida.33 When property is owned as tenants in common, each co-owner owns an interest in the property and, unless specifically stated otherwise, a presumption exists of equal ownership.34 Therefore, two co-owners would be presumed to own the property with each having a 50 percent interest; however, one owner could have a 99 percent interest, while the other owner has a one percent interest as long as they specify these interests. Conversely, co-owners of property titled as joint tenants with right of survivorship have a “unity of interest,” meaning their interests are identical in the property.

How is the homestead creditor exemption affected when the property is owned as tenants in common or as joint tenants with right of survivorship? In order to answer this question, there are two issues that need to be addressed: 1) whether a person with a fractional ownership can claim the homestead creditor exemption, and 2) which of the co-owners qualify for the homestead creditor exemption, and which, if any, do not. The Florida Constitution does not restrict the type of property ownership required to qualify for the homestead exemption, only requiring that the property must be “owned by a natural person.”35 This is also supported by Florida case law, in which the courts have consistently stated that the ownership requirement under the Constitution should be expansively construed.36 Therefore, as long as a person has an ownership interest in the property, he or she will not be barred from claiming the homestead creditor exemption solely because the property is co-owned.

Co-ownership of property will not prevent an owner from claiming the homestead creditor exemption; however, the status of each co-owner impacts the level of creditor protection retained by the property. When all co-owners qualify for the homestead creditor exemption, the home will be exempt from forced sale and liens. As an example, assume that Abby, Ben, and Chuck own whiteacre as tenants in common each with a one-third interest. Provided all three qualify for the homestead creditor exemption, whiteacre will be exempt from the individual creditors of Abby, Ben, and Chuck. Thus, if Chuck is in debt, Chuck’s creditors can go after Chuck’s personal assets, but his creditors cannot take his interest in or attach a lien to his homestead, whiteacre. The results would be the same even if the three owned the property as joint tenants with right of survivorship. All three living on the property and qualifying for the homestead creditor exemption creates a complete shield on the property from creditors.37

When at least one co-owner does not qualify for the homestead creditor exemption, a potential problem exists. In Tullis v. Tullis, 360 So. 2d 375 (Fla. 1978), the Florida Supreme Court held that the Florida “constitutional provisions allow the partition and forced sale of homestead property upon suit by one of the owners of that property” provided it is to protect the owner’s beneficial enjoyment.38 Thus, any of the co-owners of real property can force the property to be partitioned and sold.39 Therefore, if a co-owner does not qualify for the homestead creditor exemption, a creditor of that co-owner can acquire that interest and then force a sale.40 For example, assume Abby, Ben, and Chuck still have one-third interests in whiteacre as tenants in common, except now Abby no longer qualifies for the homestead creditor exemption. Ben and Chuck now have to worry about Abby’s creditors. If Abby accumulates debt, her creditors can foreclose on and take her interest in whiteacre. Once Abby’s creditors have her interest in whiteacre, they become co-owners with Ben and Chuck, and they can force a sale of the property.41 Until Abby qualifies for the homestead creditor exemption in whiteacre, Ben and Chuck will always be at risk.

A chain is only as strong as its weakest link, and this holds true for property owned as tenants in common or as joint tenants with right of survivorship. Property will be completely shielded from creditors when all co-owners qualify for the homestead creditor exemption. However, if at least one co-owner does not qualify for the homestead creditor exemption, the property becomes subject to that co-owner’s creditors. This is extremely important to understand when acquiring property with others. It is common to see family, especially parents and children, purchase property together or add each other to the title of property. Parents need to know that if they place a child’s name on the deed and that property is not the child’s homestead for creditor protection purposes, then that property is subject to the child’s creditors. Additionally, children need to be aware that if their parents are on the title to their homestead (maybe they helped purchase the property many years ago), that property is subject to their parents’ creditors (unless, of course, the parents are now living there, and it is their homestead for creditor protection purposes).

Life Estates and Remainder Interests — Individuals may also take title to property in a manner that divides ownership into present and future interests. Under this type of ownership, a person may take a life estate, which means he or she has a present possessory interest in the property and is entitled to all ordinary uses of the property until death.42 However, ordinary use does not permit a life tenant to do anything that injures the future interest in the property. Therefore, a life tenant cannot neglect the property allowing it to fall into disrepair or commit waste, such as consuming or exploiting the resources upon the property.43 The remainder (future) interest holder must approve any improvements to the property, and has the right to inspect the property for waste or damage.44 Upon the death of the life tenant, the life estate ends and the remainderman (person with the remainder interest) becomes the owner by operation of law.

To determine if and how the homestead creditor exemption applies to life estates and remainder interests, the following questions must be addressed: 1) whether individuals with fractional ownership in time can claim the homestead creditor exemption, and if so 2) which of the co-owners qualify for the homestead creditor exemption. The homestead “ownership” requirement under the Florida Constitution does not restrict the type of property ownership; therefore, a life tenant can qualify for the homestead creditor exemption with his or her life estate.45 The Florida Supreme Court in Aetna Ins. Co. v. Lagasse, 223 So. 2d 727 (Fla. 1969), held that remainder interests, including vested remainders, were not able to qualify for the homestead creditor exemption, even if he or she lived on the property, because there was no “present right to possession.”46 Thus, a life tenant can qualify for the homestead creditor exemption with a life estate, but the Florida Supreme Court has determined that a remainderman cannot qualify with a remainder interest.

When the life tenant qualifies for the homestead creditor exemption, the property is still protected from the life tenant’s creditors, but it is not safe from the remainderman’s creditors. For example, if Donna takes a life estate in blackacre while qualifying for the homestead creditor exemption and grants Ed and Frank equal remainder interests, Ed and Frank’s creditors can potentially take their remainder interests in blackacre. However, even if Ed or Frank’s creditors took their interest, there is little they could do with it until Donna died. Co-owners who share interests in time (life tenants and remainderman), unlike co-owners who share present interests, may not partition life estates.47 Therefore, a life tenant, such as Donna, could continue to reside on the property without worrying about the remaindermans’ creditors being able to force sale of the property.

However, it is important to note that recently, two Florida bankruptcy cases held that a person with a vested remainder who lived on and made the property his or her residence could qualify for the homestead creditor exemption.48 Therefore, if a remainderman finds himself or herself in a Florida bankruptcy court, he or she has precedent to argue for the homestead creditor exemption. Of course, for Florida courts, the bankruptcy court decisions are merely persuasive and not binding; nevertheless, it does leave room for discussion on the subject.

Alienation, Devise, and Descent
Florida has certain restrictions on how homestead property may be alienated and devised, as well as rules dealing with improperly devised homestead upon the owner’s death. Fla. Const. art. X, §4(c) provides that:

(c) The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner’s spouse if there be no minor child. The owner of homestead real estate, joined by the spouse if married, may alienate the homestead by mortgage, sale or gift and, if married, may by deed transfer the title to an estate by the entirety with the spouse.

This provision is codified in F.S. §732.4015(1), where it is similarly states that “the homestead shall not be subject to devise if the owner is survived by a spouse or a minor child or minor children, except that the homestead may be devised to the owner’s spouse if there is no minor child or children.”49 F.S. §732.401(1) further states that “[i]f not devised as authorized by law and the constitution, the homestead shall descend in the same manner as other intestate property; but if the decedent is survived by a spouse and one or more descendants, the surviving spouse shall take a life estate in the homestead, with a vested remainder to the lineal descendants in being at the time of the decedent’s death per stirpes.” However, the spouse may also make an election “to take an undivided one-half interest in the homestead as tenants in common, with the remaining one-half interest vesting in the decedent’s descendants in being at the time of the decedent’s death, per stirpes,” instead of taking the life estate.50

When an individual has no spouse or minor children, he or she is free to devise the homestead property anyway he or she pleases.51 Conversely, when an individual is survived either by a spouse or minor child(ren), then the property is not subject to devise and will pass as intestate property (meaning that the sole surviving spouse will become the sole owner52 if there are no descendants, or the surviving minor child(ren) will become the sole owner if there is no surviving spouse).53

The rules concerning alienation, devise, and descent only apply to a co-owner if the property is the co-owners’ homestead pursuant to Fla. Const. art. X, §4 (“transfer restricted homestead”);54 thus, any of the other co-owners who do not reside on the property are free to dispose of their property as they see fit. The article now examines how these rules apply to a co-owner of property where he or she owns transfer restricted homestead property.

Alienation — With regard to alienation of property, the Florida Constitution does not place any restrictions on alienation except that a married owner must have spousal consent to do so (despite whether the spouse has an ownership interest of his or her own in the property).55

Devise and Descent, Tenants by the Entirety — The rules regarding devise and descent of transfer restricted homestead property do not apply to property owned as tenants by the entirety.56 This is because at the death of one spouse, property owned as tenants by the entirety passes to the surviving spouse automatically, outside of probate — therefore, there is no devise or descent of the homestead property.

Devise and Descent, Joint Tenants with Right of Survivorship — The rules regarding devise and descent do not apply to transfer restricted homestead owned as joint tenants with right of survivorship, because, similar to property owned as tenants by the entirety, at death the property passes automatically to the other joint owners.57 Therefore, co-owners who want to preserve the transfer restricted homestead for their spouse or children should be cautious about owning property as joint tenants with right of survivorship. For example, assume Abby, Ben, and Chuck own whiteacre as joint tenants with right of survivorship, and Chuck lives on whiteacre with his family. If Chuck dies, Abby and Ben become the sole owners of whiteacre. Chuck’s family will have no interest in whiteacre, which means Abby and Ben can force Chuck’s family to vacate what was their family home.

Devise and Descent, Tenants in Common — When property is owned as tenants in common, the constitutional and statutory rules of devise and descent apply to transfer restricted homestead. Therefore, a co-owner is not free to devise his or her transfer restricted homestead when he or she has a surviving spouse or minor child. Instead, the co-owner’s interest in the transfer restricted homestead property must pass to his or her surviving spouse and/or minor child(ren) as designated by law.

Devise and Descent, Life Estates and Remainders — The rules regarding devise and descent of transfer restricted homestead do not apply to life estates because life estates end at the death of the life tenant; thus, there is no interest for the life tenant to devise or pass along. Like tenants by the entirety and joint tenants with right of survivorship, at death the interest passes automatically, and in the case of a life estate, to the remainderman. As for the remainderman, the devise and descent rules do not apply because the remainderman, under current Florida law, do not have a present possessory interest necessary to receive the homestead protections.

Conclusion
Florida offers many benefits to property owners who qualify for homestead. However, co-ownership of property makes realizing the full benefits of Florida homestead more complicated and difficult. Co-owners must pay particular attention to how they title their property and their percentage of ownership in order to maximize creditor protection and exemption from taxes. They must also consider that the form of ownership they select will determine whether their homestead will be preserved for their families and if any restrictions on devise and descent exist. There is no one-size-fits-all form of ownership, instead co-owners must evaluate their situation and determine which form allows them to accomplish the most and at what expense.


1 See Fla. Const. art. VII, §6.

2 Fla. Const. art. X, §§4(a)-(b).

3 Fla. Const. art. X, §4(c). See also Cutler v. Cutler, No. 3D04-3070 (Fla. 3d D.C.A. Feb. 28, 2007).

4 Richard Franklin and Roi Baugher, Protecting and Preserving the Save Our Homes Cap, 77 Fla. B.J. 34, 34 (Oct. 2003).

5 Fla. Stat. §196.031(1)(a) (2011) (“If only one of the owners of an estate held by the entireties or held jointly with the right of survivorship resides on the property, that owner is allowed an exemption up to the assessed valuation of $25,000 on the residence and contiguous real property.”).

6 $60,000 (assessed value) minus $25,000 (tax exemption) = $35,000 taxable value.

7 Fla. Stat. §197.122(1) (2011) (“All owners of property are held to know that taxes are due and payable annually and are responsible for ascertaining the amount of current and delinquent taxes and paying them before April 1 of the year following the year in which taxes are assessed.”).

8 Fla. Stat. 196.031(1)(a) (2011).

9 Fla. Admin. Code R. 12D-7.012 (2011).

10 Fla. Stat. §196.041(2) (2011).

11 There could be multiple life estate holders (usually seen with a husband and wife), and in those situations the same rules apply based on how the life estate holders are sharing their interests (i.e., tenants in common, by the entirety, right of survivorship).

12 While a couple Florida bankruptcy court cases have held that a remainder interest holder may be entitled to creditor protection, the argument does not apply to the homestead tax exemptions, and this is because homestead creditor protection and homestead tax exemptions are separate and distinct. See Phillips v. Hirshon, 958 So. 2d 425, 427 (Fla. 3d D.C.A. 2007); Crain v. Putnam, 687 So. 2d 1325, 1326 (Fla. 4th D.C.A. 1997).

13 Richard Franklin & Roi Baugher, Protecting and Preserving the Save Our Homes Cap, 77 Fla. B.J. 34, 34 (Oct. 2003).

14 See text accompanying note 4.

15 Change of ownership is defined as “any sale, foreclosure, or transfer of legal title or beneficial title in equity to any person”; however, there are exceptions provided by law. Fla. Stat. §193.155(3)(a) (2011).

16 Fla. Stat. §193.155(3)(a) (2011). See generally Richard Franklin & Roi Baugher, Protecting and Preserving the Save Our Homes Cap, 77 Fla. B.J. 34 (Oct. 2003).

17 Excluding the application of the $25,000 homestead tax exemption.

18 See also Fla. Admin. Code R. 12D-7.012 (2011) (“No tenant in common shall receive the homestead tax exemption in excess of the assessed valuation of the proportionate interest of the person claiming the exemption.”).

19 See note 10 and accompanying text.

20 Unless the remainderman acquired his or her interest in a manner not considered a “change of ownership” under Fla. Stat. §193.155(3)(a) (2011), such as by operation of law under Fla. Stat. §732.401 (2011).

21 Remember the remainderman cannot qualify for homestead and, therefore, cannot use the $25,000 tax exemption or the SOH tax cap. See Fla. Stat. §196.041(2) (2011) (the remainderman is not included, only the life tenant).

22 See Havoco of America, Ltd. V. Hill, 790 So. 2d 1018 (Fla. 2001) (demonstrating the far-reaching creditor protection).

23 Snyder v. Davis, 699 So. 2d 999, 1001 (Fla. 1997).

24 For a detailed discussion outlining the specific requirements of each condition, see Barry Nelson & Kevin Packman, Florida’s Unlimited Homestead Exemption Does Have Some Limits, Part I, 77 Fla. B. J. 60 (Jan. 2003).

25 Other than for taxes and obligations arising from the purchase, improvement, repair, or labor related to the homestead property. Fla. Const. art. X, §4(a) (2010).

26 Beal Bank, SSB v. Almand and Associates, 780 So. 2d 45, 52-53 (Fla. 2001).

27 First Nat’l Bank of Leesburg v. Hector Supply Co., 254 So. 2d 777 (Fla. 1971).

28 Sitomer v. Orlan, 660 So. 2d 1111, 1113 (Fla. 4th D.C.A. 1995) (“A unique aspect of a tenancy by the entirety is that each spouse is ‘seized of the whole or the entirety, and not of a share, moiety, or divisible part.’” (quoting Bailey v. Smith, 103 So. 833, 834 (1995))).

29 Moxley v. Wickes Corp., 356 So. 2d 785, 785 n.1 (Fla. 1978).

30 Hoskin v. Hoskin, 329 So. 2d 19 (Fla. 3d D.C.A.), modified, Tullis v. Tullis, 360 So. 3d 375 (Fla. 1978).

31 Fla. Stat. §689.15 (2011).

32 However, a married couple can own property as tenants in common or as joint tenants with right of survivorship instead of as tenants by the entirety as long as they use the proper language designating that form of ownership. See Beal Bank, SSB v. Almand and Associates, 780 So. 2d 45, 53 (Fla. 2001).

33 Fla. Stat. §689.15 (2011) (unless it is a married couple acquiring property).

34 See Julia v. Russo, 984 So. 2d 1286, 1285 (Fla. 4th D.C.A. 2008) (quoting In re Levy, 185 B.R. 378, 381 (Bankr. S.D. Fla. 1995) (“In absence of evidence to the contrary, co-tenants are presumed to [own] equal undivided interests”).

35 Fla. Const. art. X, §4(a) (2010).

36 Havoco of Am., LTD v. Hill, 790 So. 2d 1018, 1020 (Fla. 2001) (“[t]his court has long emphasized that the homestead exemption is to be liberally construed in the interest of protecting the family home. (citing Milton v. Milton, 63 Fla. 533, 58 So. 718, 719 (1912))); Vandiver v. Vincent, 139 So. 2d 704 (Fla. 2d D.C.A. 1962) (stated that a person “could claim exemption in whatever interest she has in the property as her homestead”); Souther Walls, Inc. v. Stilwell Corp., 810 So. 2d 566, 569 (Fla. 5th D.C.A. 2002) (the constitution “does not designate how title to the property is to be held and it does not limit the estate that must be owned, i.e., fee simple, life estate, or some lesser interest”); see also Callava v. Feinbers, 864 So. 2d 429 (Fla. 3d D.C.A. 2003); In Re Ballato, 318 B.R. 205 (Bankr. M.D. Fla. 2004).

37 Except for taxes and obligations arising from the purchase, improvement, repair, or labor related to the property. Fla. Const. art. X, §4(a) (2010).

38 Tullis v. Tullis, 360 So. 2d 375, 377 (Fla. 1978).

39 If a co-owner of property titled as joint tenants with right of survivorship breaks one of the unities creating that form of ownership, such as a conveyance to a third party, the property loses its survivorship status as to that portion and defaults as being held as tenancy in common. See Kozacik v. Kozacik, 157 Fla. 597, 26 So. 2d 659 (1946); Wittock v. Ramponi, 446 So. 2d 271 (Fla. 4th D.C.A. 1984).

40 Once the creditor acquires a co-owner’s interest, if it was titled as joint tenants with right of survivorship that breaks one of the required unities resulting in ownership as tenants in common between the creditor and remaining co-owners (whose interest if multiple would still be as joint tenants with right of survivorship).

41 Ben and Chuck would each receive one-third of the net proceeds from the forced sale.

42 Sauls v. Crosby, 258 So. 2d 326, 327 (Fla. 1st D.C.A. 1972); see also Chapman v. Chapman, 526 So. 2d 131, 135 (Fla. 3d D.C.A. 1988); Schneberger v. Schneberger, 979 So. 2d 981 (Fla. 4th D.C.A. 2008).

43 Sauls, 258 So. 2d at 327.

44 See Donna Seiden, An Update on the Legal Chameleon: Florida’s Homestead Exemption and Restrictions, 40 U. Fla. L. Rev. 919, 942-43 (1988).

45 See notes 35 and 36 and accompanying text; see also Litman, An Update on the Legal Chameleon: Florida’s Homestead Exemption and Restrictions, 40 U. Fla. L. Rev. 919, 942 (1988).

46 Aetna Ins. Co. v. LaGasse, 223 So. 2d 727, 729 (Fla. 1969) (quoting Anemaet v. Martin-Senour Co., 114 So. 2d 23, 27 (1959)).

47 Fla. Stat. §64.031 (2011) (Only permits joint tenants, tenants in common, and coparcencers to partition); Garcia-Tunon v. Garcia-Tunon, 472 So. 2d 1378, 1379 (Fla. 2d D.C.A. 1985) (held “that a partition action is not available to an owner of a life estate seeking to partition against remaindermen”); Barden v. Pappas, 532 So. 2d 707, 709-10 (Fla. 5th D.C.A. 1988) (held that the “life tenant(s) may not partition the remainder,” and explained that remaindermen “are not joint tenants, tenants in common, or coparceners.” Therefore, a remainderman would not be able to partition under the statute.).

48 In re Williams, 427 B.R. 541 (Bankr. M.D. Fla. 2010); In re Hildebrandt, 432 B.R. 852 (Bankr. N.D. Fla. 2010).

49 Fla. Stat. §732.4015(1) (2011).

50 Fla. Stat. §732.401(2) (2011).

51 However, if the property is devised to heirs of the decedent, it will remain exempt from creditors, as long as the decedent does not specify that the home be sold and the proceeds divided. See Moss v. Estate of Moss, 777 So. 2d 1110 (Fla. 4th D.C.A. 2001); Thompson v. Laney, 766 So. 2d 1087 (Fla. 3d D.C.A. 2000); Knadle v. Estate of Knadle, 686 So. 2d 631 (Fla. 1st D.C.A. 1996).

52 Fla. Stat. §732.101 (2011).

53 Fla. Stat. §732.102 (2011).

54 Holden v. Estate of Gardner, 420 So. 2d 1082, 1085 (Fla. 1982) (“Subparagraph (c) [of Section 4 of Article X of the Florida Constitution] begins with the phrase, ‘The homestead shall not be subject to devise... .’ We believe that this refers to homestead as it is otherwise used in section 4. To adopt [otherwise] would create two distinct definitions of homestead; one definition under subparagraphs (a) and (b) of section 4, and another definition under subparagraph (c) concerning the devise of the homestead.”).

55 Fla. Const. art. X, §4(c) (2010); see also Donna Seiden, An Update on the Legal Chameleon: Florida’s Homestead Exemption and Restrictions, 40 U. Fla. L. Rev. 919, 939-43 (1988).

56 Fla. Stat. §732.401(5) (2011).

57 Fla. Stat. §732.401(5) (2011); see Marger v. De Rosa, 57 So. 3d 866 (Fla. 2d D.C.A. 2011).


Joseph M. Percopo practices law in central Florida. His practice concentrates on estate planning, asset protection, business and tax law. He is a graduate of the Florida State University College of Law with highest honors and earned his LL.M. in taxation from the University of Florida Levin College of Law graduate tax program. The author would like to dedicate this article to his late grandfather Clarence Brigman, as well as thank Shane Kelley, Donna Litman, and Ron Gunzburger for their input and assistance.

This column is submitted on behalf of the Real Property, Probate and Trust Law Section, George Joseph Meyer, chair, and William P. Sklar and Kristen Lynch, editors.

[Revised: 06-18-2012]