Florida’s Homestead Realty: Is it Exempt from Imposition of an Equitable Lien for Nonpayment of Alimony and Child Support?
When payor former spouses/parents obligated by court order to pay alimony and/or child support fall behind, the focus of the law is on helping parents and former spouses collect delinquent support with minimum costs.1 Regardless of the reasons why alimony and child support are not paid — loss of employment, underemployment, chronic disease, injury, obstinacy — there are many available collection methods, including income withholding;2 r evocation of driver’s licenses, motor vehicle and vessel registrations;3 s uspension of professional, recreational, and occupational licenses of parents;4 denial of passports;5 federal and state tax refund offsets;6 l iens on property;7 a ttachment and garnishment of financial accounts including IRAs;8 qualified domestic relations orders (QDROs) to recover all or a portion of alimony or child support arrearage from the owner of a retirement plan,9 and contempt of court.10 All methods are cumulative and can be used until the amount owed plus interest is paid in full.11
Can a circuit court impose an equitable lien against homestead realty owned by a payor former spouse/parent for delinquent support? If a payor former spouse/parent owns homestead realty, does Fla. Const. art. X, §4(a) constitute a complete defense to an equitable lien when a former spouse/parent tries to recover delinquent child support or alimony from a payor former spouse/parent? Florida district courts of appeal have ruled that courts may impose an equitable lien on homestead realty beyond the exceptions provided in Fla. Const. art. X, §4 when a nonpayor former spouse/parent has used the homestead exemption to avoid alimony and child support obligations by the use of fraud and egregious conduct.12 In Havoco of America v. Hill, 790 So. 2d 1018 (Fla. 2001), the Florida Supreme Court held that the homestead realty exemption in the Florida Constitution protects a homestead acquired by a debtor using nonexempt assets with the intent to hinder, delay, or defraud creditors.13 Havoco of America appears to be controlling authority to shield homestead realty from all claims of creditors, including those by former spouses/parents against payor former spouse/parent owing delinquent child support and/or alimony. However, footnote 12 of Havoco of America14 q uestions and leaves open for future consideration rulings by district courts of appeal that permit equitable liens on homestead realty when a payor former spouse/parent has used the homestead exemption to avoid his or her alimony and child support obligation.15 This article will discuss why it is a violation of Fla. Const. art. X, §4(a)(1) to impose an equitable lien on homestead realty owned by a payor former spouse/parent, where the payor former spouse/parent has used the homestead exemption to avoid his or her alimony or child support obligation.
• Homestead realty exemption: Is it a shield, sword, or both?
Florida’s homestead exemption is one of the most protective in the United States.16 It grants nearly absolute protection from forced sale from the claims of creditors, except in three special circumstances: 1) payment of taxes and assessments thereon owed to the state, counties, and municipalities ( e.g., real estate assessments and taxes); 2) obligations contracted thereon for the purchase, improvement, or repair ( e.g., mortgage pledge); 3) obligations contracted with persons in repairing or improving the realty or house, field, or other labor performed on the realty ( e.g., construction liens).17 There are four basic requirements that must be met for realty to qualify as homestead in Florida: An owner must be a natural person, who establishes or intends to establish the realty as a permanent residence within the size and contiguity requirements of the constitution.18 The value of protected homestead realty within and outside of a municipality is unlimited.19 Fla. Const. art. X, §4(a) applies automatically upon establishment of these requirements, and it can only be lost if the homeowner permanently abandons its use as a permanent residence.20 On account of Florida’s liberal homestead realty exemption from forced sale,21 The homestead exemption can be viewed as both a shield and a sword to defeat creditors’ claims.22
Homestead Protection Under Havoco of America
In 1981, Havoco filed suit against Hill in a damages action. A jury found for Havoco in the amount of $15,000,000 in damages. The U.S. district court entered judgment in accordance with the jury verdict on December 19, 1990, and it became enforceable shortly thereafter. Hill, a life long resident of Tennessee, purchased Florida realty on December 30, 1990, for $650,000 in cash. He claimed that he intended to retire and make Destin his primary residence. The Florida Supreme Court was asked by the federal appellate court to decide whether Fla. Const. art. X, §4 exempted homestead realty from forced sale, when the debtor acquired the homestead using nonexempt funds with the specific intent of hindering, delaying, or defrauding creditors. The Florida Supreme Court answered the certified question affirmatively, and held that Hill’s homestead realty was exempt from forced sale.23
Arguments in Support of Protection from Imposition of an Equitable Lien
• Fla. Const. art. X, §4 is plain, clear, and unambiguous.
The plain and unqualified language of Fla. Const. art. X, §4 supports the principle that homestead exemption provides absolute protection from forced sale regardless of the method the homestead was obtained, except in three enumerated exceptions. Strict construction principles direct that all branches of government — executive, judicial, and legislative — follow the exact wording of Fla. Const. art. X, §4. No branch of government can deviate from the constitution’s clear and plain language.24
• A referendum is required to alter provisions of the Florida Constitution.
The electorate, not the legislature or judiciary, has the exclusive authority to alter provisions of Fla. Const. art. X, §4.25 If a change to the Florida Constitution is in order, then referral to the Constitutional Revision Commission is available to decide if an amendment should be placed on the ballot for voter approval.26 In Strand v. Escambia County, 32 Fla. L. Weekly S587, September 6, 2007, as amended September 28, 2007, the Florida Supreme Court affirmed its obligation to correct legally erroneous precedent, even if a decision departs from long established precedent. Strand held that Fla. Const. art. VII, §12, requires a referendum whenever bonds financing capital improvements are “payable from ad valorem taxation” by tax increment financing (TIF), and if they mature more than 12 months after issuance. Established precedent before Strand indicated that local governing bodies could issue bonds payable from ad valorem taxation and TIF without approval by a referendum.27 Regardless of how Strand is ultimately decided — the high court in Strand has granted rehearing — the opinion is noteworthy because the Florida Supreme Court affirmed its obligation to correct legally erroneous precedent when necessary to follow Florida law. Although stare decisis is based on the need for stability and consistency in the law, if established precedent has been wrongly decided, it is incumbent on the state’s highest court to correct an error in legal analysis and follow the Florida Constitution.28 Similarly, decisions by district courts of appeal permitting an equitable lien on homestead realty beyond the exceptions provided in Fla. Const. art. X, §4 are questionable, because they amend Fla. Const. art. X, §4 without a referendum. Decisions decided before and after Havoco of America are contrary to the mandate and plain wording of Fla. Const. art. X, §4. The only way to authorize a court to impose an equitable lien on homestead realty beyond the exceptions provided in Fla. Const. art. X, §4 is by referendum.
• “There’s no place like the old homestead.”
The homestead realty exemption provides for the constitutional sanctity of the home, so that a homeowner’s residence remains beyond the reach of creditors.29 The rationale behind this public policy is, first, homestead protection promotes the stability and welfare of the state and relieves it from the burden of supporting destitute families. Second, homestead exemption protects the homeowner and family from creditors’ demands and financial misfortune.30
Homestead protection, however, can have a detrimental effect on the debtor’s original family if support is ignored by the payor former spouse/parent. If homestead realty is exempt from the imposition of an equitable lien in which a payor former spouse/parent has used the homestead exemption to avoid a support obligation, then homestead exemption treats two separate families owed support from the same payor differently. Does this different treatment of families run afoul of the equal protection clause of the U.S. and Florida constitutions? No, because applying homestead realty protection in favor of an owner and family does not set up an unjustifiable standard based on race, religion, or some other arbitrary and capricious classification.31 Further, different owners and their families are still entitled to claim homestead realty protection from levy, albeit at different homesteads. Even with different treatment, public policy concerns are met, as the homestead provision uniformly applies to all owners and their families if a judgment is entered against its owner and an attempt is made to levy on the homestead realty.32
In contrast, it can be argued that homestead exemption should not permit a payor former spouse/parent from claiming its benefits against the same person to whom a duty of support is owed, or else the homestead exemption will overcome its intended purpose.33 Further, when a nonpayor former spouse/parent has used homestead exemption to avoid a support obligation, such financial circumstance has been voluntarily brought about by the current payor former spouse/parent. Clearly, a diminished financial ability of the payor spouse can have a devastating effect on the financial welfare of the former spouse and family. Therefore, the homestead provision should not be used to help a payor former spouse/parent avoid paying court-ordered support at the expense of a former spouse/parent and family.34
The homestead provision is a fundamental principle of public policy. Even if the homestead exemption provision treats similarly situated persons differently, the overriding public policy concerns favor the sanctity of the home and should defeat all creditors’ claims, except those that fall within an exception of Fla. Const. art. X, §4.35
• Homestead protection applies to all debtors regardless of class, status, or conduct.
A deeply rooted history in favor of the sanctity of the home is paramount over an immoral or criminal act of a debtor.36 Fla. Const. art. X, §4 prevails over illegal acts of individuals having a right to claim a homestead realty exemption. Florida law provides penalties to those violating criminal laws, but eliminating homestead rights guaranteed by the Florida Constitution is not part of the punishment. Homestead exemption applies to all individuals regardless of their class, status, or conduct.37
• Neither the courts nor the legislature can carve out exceptions to the Florida Constitution.
Courts have authority to carve out exceptions to enforcement of statutes and causes of action. They can refuse to allow an action to proceed, or impose sanctions against a responsible party, including dismissal, where a party falsifies evidence, engages in spoliation of evidence, if a debtor voluntarily brings about his or her own financial decline from a deliberate divestment, and acts of bad faith.38 In contrast, if the judiciary carves out exceptions to homestead protection by creating an equitable lien for fraud, nonpayment of child support and alimony, or any other inequitable or egregious conduct of a homeowner, such judicially made exceptions will run afoul of Fla. Const. art. X, §4.39 Likewise, the legislature cannot enact statutes that modify or are contrary to the Florida Constitution. In Bush v. Holmes, 919 So. 2d 392 (Fla. 2006), the Florida Supreme Court was called upon to decide the constitutionality of F.S. §1002.38 (Florida’s opportunity scholarship program (OSP)) allowing qualified students to attend private schools at state expense. The Supreme Court held that the OSP statute was a violation of Fla. Const. art. IX, §1(a) because the constitutional provision specifically required the state to provide a “uniform, efficient, safe, secure, and high quality system of free public schools that allows students to obtain a high quality education ….”40
No branch of government has the authority to alter the Florida Constitution. A debtor’s right to exempt homestead realty from levy flows exclusively from Fla. Const. art. X, §4. This constitutional provision supersedes any attempt by the judiciary or legislature of eliminating a debtor’s right to exempt homestead realty from creditors’ claims. Homestead protection is a strict limitation on the power of the judiciary and legislature to modify homestead exemption.
Homestead Waiver, Forced Sale, and the Three Enumerated Exceptions
Can a homeowner waive homestead exemption by executing an unsecured instrument? In Chames v. Demayo, 972 So. 2d 850 (Fla. 2007), the Florida Supreme Court was called upon to determine whether a homeowner can waive homestead exemption by executing a promissory note, retainer agreement, or any other unsecured instrument without formally mortgaging homestead realty. The high court held that when an attorney was retained in a dissolution of marriage action, a waiver of homestead exemption specifically provided for in a retainer agreement was invalid and, therefore, the circuit court could not award a lien for unpaid attorneys’ fees on the client’s homestead realty.41 According to Chames, when there is a possibility of a forced sale upon entry of a judgment, there can be no waiver, because it is not permitted in Fla. Const. art. X, §4. Chames is consistent with the position that where the payor former spouse/parent uses the homestead exemption to avoid a support obligation, a court cannot impose an equitable lien on homestead realty, because it is not provided for in Fla. Const. art. X, §4.
There is no cause of action against a debtor’s attorney, certified public accountant, or financial advisor if they are paid fees to facilitate a fraudulent transfer of physical assets. In Freeman v. First Union National Bank, 865 So. 2d 1272 (Fla. 2004), the Florida Supreme Court answered a certified question from the federal appellate court: “Under Florida law, is there a cause of action for aiding and abetting a fraudulent transfer when the alleged aider-abettor is not a transferee?”42 The Supreme Court held that the Uniform Fraudulent Transfer Act (UFTA) did not create a cause of action against an advisor bank for aiding and abetting a fraudulent transfer. Freeman determined that there is a distinction between common law fraud and deceit, on one hand, and remedies under UFTA, on the other hand. Fraud under UFTA does not rise to the level of egregious and reprehensible conduct that will make an advisor legally liable for aiding and abetting a fraudulent transfer to a third party. Further, it is the advisor’s legal obligation to preserve a client’s assets from attack and levy by thoroughly creating an asset protection plan when offering advice on homestead exemption planning, and to zealously defend against creditors’ attacks if they try to levy and attach their assets.43 In a trilogy of decisions — Havoco of America, Freeman, and Chames — the Florida Supreme Courthas viewed the provisions of Fla. Const. art. X, §4 and UFTA in a manner that strictly follows their plain language rather than judicially creating exceptions.
There are many available methods to collect delinquent child support and alimony, including the time-honored method of contempt of court, but imposing an equitable lien on homestead realty is not one of them. When a nonpaying former spouse/parent has used the homestead exemption to avoid an alimony or child support obligation, creation of an equitable lien on homestead realty goes beyond the three exceptions provided for in Fla. Const. art. X, §4. There are strong public policy reasons why Fla. Const. art. X, §4, should be strictly followed. First, it flows from a deeply rooted history and sanctity of the home dating back to the mid-1800s enactment of the Florida Constitution. Second, the homestead provision is a dominant rule of public policy and a fundamental value of the people. Third, thereis a strict limitation on the power of the judiciary and legislature to alter and amend the constitution and its homestead exemption provisions. The landmark decisions of Havoco of America and Chames support the fundamental principle that courts cannot judicially create exceptions to Fla. Const. art. X, §4. Bush v. Holmes supports the basic rule that the legislature cannot enact statutes contrary to the Florida Constitution. A basic foundation of the Florida Constitution is that only the electorate can alter and amend its provisions. The Florida Supreme Court should follow the unqualified language of Fla. Const. art. X, §4 without carving out exceptions when called upon to decide the issue left open by footnote 12 of Havoco of America. The high court should conclude that it is a violation of Fla. Const. art. X, §4 to impose an equitable lien on homestead realty, where a payor former spouse/parent has used the homestead exemption to avoid an alimony or child support obligation.
1 See U.S. Government Accounting Office. GAO-06-491. Child Support Enforcement. More Focus on Labor Costs and Administrative Cost Audits Could Help Reduce Federal Expenditures (2006), available at www.gao.gov/new.items/d06491.pdf; U.S. Government Accounting Office. GAO 04-377 Child Support Enforcement. Better Data and More Information on Undistributed Collections Are Needed (2004), www.gao.gov/new.items/d04377.pdf. Florida support payments can be ordered paid through a state depository. See also Fla. Stat. §§61.09, 61.181, 61.1826, 61.1811, 61.1812, 61.1814, 61.1816, 61.30 (2007).
2 Fla. Stat. §§61.12, 61.1301, 61.30 (2007).
3 Fla. Stat. §§61.13016, 322.058, 328.42 (2007).
4 Fla. Stat. §§61.13015, 409.2598, 455.203, 559.79 (2007).
5 42 U.S.C. §§652(k), 654(31).
6 42 U.S.C. §664 (2007); 45 C.F.R. §303.72 (2007).
7 For nonexempt real property, Fla. Stat. §55.10(1) (2007) provides that a judgment, order, or decree becomes a lien on real property in any county when a certified copy is recorded in the official records of the county. See also Kaecek v. Knight, 447 So. 2d 900 (Fla. 2d D.C.A. 1984).
8 In a Ch. 61 contempt proceeding, a trial court may properly look to a former spouse’s individual retirement account (IRA) to determine whether that spouse has the ability to pay a purge amount in a contempt order. Fla. Stat. §222.21(2)(a) (2007) does not shield IRA assets from a court order to pay Ch. 61 obligations. See Siegel v. Siegel, 700 So. 2d 414 (Fla. 4th D.C.A. 1997).
9 T. Voit, QDROs — A Powerful Tool for Child Support Enforcement, 79 Fla. B. J. 38 (January 2005).
10 An order of contempt for failure to pay child support or alimony must include factual findings containing the existence of a prior valid order of support, the failure to pay all or part of the ordered support, the present ability of the offending party to pay the support, and the willful refusal of the offending party to comply with the prior court order. See Fla. Fam. L. R. P. 12.615(d) (1); Bowen v. Bowen, 471 So. 2d 1274 (Fla. 1985); Faircloth v. Faircloth, 339 So. 2d 650 (Fla. 1976); Lawrence v. State, Department of Revenue ex rel. Walker, 755 So. 2d 139 (Fla. 2d D.C.A. 1999).
11 See generally Koon v. Boulder County Dept. of Social Services, 494 So. 2d 1126 (Fla. 1986); State, Dept. of Health and Rehabilitative Services v. Franklin, 630 So. 2d 661 (Fla. 2d D.C.A. 1994). For decisions holding that interest becomes due and owing when the obligation is created, see Engineered Installation, Inc. v. Higley, Inc., 670 So. 2d 929 (Fla. 1996); Plunkett v. Plunkett, 843 So. 2d 978 (Fla. 4th D.C.A. 2003); Wiederhold v. Wiederhold, 696 So. 2d 923 (Fla. 4th D.C.A. 1997). At least one appellate court has held that child support payments must be applied first to current support obligation, then to accrued interest on arrearages, and finally to the principal amount due on unpaid support. See Vitt v. Rodriguez, 960 So. 2d 47 (Fla. 4th D.C.A. 2007).
12 See Sell v. Sell, 949 So. 2d 1108 (Fla. 3d D.C.A. 2007); Callava v. Feinberg, 864 So. 2d 429 (Fla. 3d D.C.A. 2003); Partridge v. Partridge, 790 So. 2d 1280 (Fla. 4th D.C.A. 2001); Dyer v. Beverly & Title, P.A., 777 So. 2d 1055 (Fla. 4th D.C.A. 2001); Smith v. Smith, 761 So. 2d 370 (Fla. 5th D.C.A. 2000); Brose v. Brose,750 So. 2d 717 (Fla. 2d D.C.A. 2000); Rosenblatt v. Rosenblatt, 635 So. 2d 132 (Fla. 2d D.C.A. 1994); Radin v. Radin, 593 So. 2d 1231 (Fla. 3d D.C.A. 1992); Gepfrich v. Gepfrich, 582 So. 2d 743 (Fla. 4th D.C.A. 1991); Smith v. Smith, 761 So. 2d 370 (Fla. 5th D.C.A. 2000); Isaacson v. Isaacson, 504 So. 2d 1309 (Fla. 1st D.C.A. 1987). These district courts of appeal decisions should be distinguished from cases where a lien is granted to a spouse to secure a special equity claim in homestead realty. See Wallace v. Wallace, 922 So. 2d 1008 (Fla. 1st D.C.A. 2006); Hieke v. Hieke, 782 So. 2d 443 (Fla. 4th D.C.A. 2001). In the latter instance, funds can be traced as a result of a spouse’s own funds and labor performed that were applied to renovate, improve, and repair homestead realty to enhance or maintain the homestead realty, which amounts to an ownership interest. Further, Fla. Const. art X, §4(a), specifically provides three exceptions to a homestead exemption, and a special equity claim in homestead realty falls within a constitutional exception.
13 Havoco of America v. Hill, 790 So. 2d 1018 (Fla. 2001); Conseco Services, LLC v. Cunco, 904 So. 2d 438 (Fla. 3d D.C.A. 2005).
14 Havoco of America v. Hill, 790 So. 2d 1018, 1028 (Fla. 2001). Havoco of America did not specifically address an award of an equitable lien on homestead realty when a former spouse avoids payment of a child support or alimony obligation. According to long-standing principles, the Florida Supreme Court will refuse to address claims made outside the scope of a certified question. It will only decide matters specifically addressed by district courts of appeal, and will refuse to address a claim not subjected to a strict jurisdictional process set forth in Fla. Const. art. V, §3 (b) (2007). See Chames v. Demayo, 972 So. 2d 850 (Fla. 2007), at footnote 2. In opting out of deciding this issue, footnote 12 of Havoco of America follows these fundamental principles of law.
15 After the decision in Havoco of America, there have been several decisions on whether an equitable lien can be awarded on homestead realty when the payor former spouse has used the homestead exemption to avoid a support obligation. In Partridge v. Partridge, 912 So. 2d 649 (Fla. 4th D.C.A. 2005), rev. den.., 942 So. 2d 413 (Fla. 2006), the appellate court affirmed the entry of a judgment of foreclosure for an equitable lien on homestead realty to satisfy the payor former spouse’s support obligation because the former spouse’s conduct was contemptuous: “Contemptuous conduct may certainly be the functional equivalent of fraud, and it represents the kind of reprehensible conduct justifying foreclosure.” Id. at 650. Similarly, in Sell v. Sell, 949 So. 2d 1108 (Fla. 3d D.C.A. 2007), an appellate court held that attorneys’ fees should be paid from the fund from the sale of marital homestead, because the former husband’s conduct was fraudulent, egregious, and consistently contemptuous in attempting to nullify a trial court’s property distribution, support, and attorney fee awards: “the exemption enshrined in [a]rticle X, §4 is not absolute…. Homestead may be subjected to equitable liens where fraud, reprehensible, or egregious conduct is demonstrated.” Id. at 1112. In Linda Hope v. Robert Schlein and Katherine Schlein, Broward Circuit Court, Case No. 94-19802-41, a circuit court on March 30, 2004, in an unpublished opinion, awarded an equitable lien in homestead realty owned by the payor former spouse’s current wife. A supplemental complaint in aid of execution was filed by Linda Hope against the payor former spouse and his current wife, Robert Schlein and Katherine Schlein. Homestead realty was purchased by Robert Schlein and Katherine Schlein and placed into the name of the payor former spouse’s current spouse, Katherine Schlein. The circuit court held that the conduct by the payor former spouse in not paying his alimony obligation amounted to fraud and egregious conduct justifying the court to impose an equitable lien on the homestead realty. An appeal was filed with the district court of appeal in Case Nos. 4D04-2137 and 4D04-2138 on June 2, 2004, but was later voluntarily dismissed upon settlement.
16 See J. Adkisson and C. Riser, Homstead Exemptions: State Resources, Asset Protection, Concepts and Strategies for Protecting Your Wealth, available at www.assetprotectionbook.com/homestead_exemptions.htm.
17 Fla. Const. art. X, §4(a) (2007).
18 See id.; Public Health Trust of Dade County v. Lopez, 531 So. 2d 946 (Fla. 1988) (natural person); City of Jacksonville v. Bailey, 30 So. 2d 529 (Fla. 1947); Cain v. Cain, 549 So. 2d 1161 (Fla. 4th D.C.A. 1989); McGann v. Halker, 530 So. 2d 440 (Fla. 3d D.C.A. 1988); Dean v. Heimbach, 409 So. 2d 157 (Fla. 1st D.C.A. 1982) (permanent residence); Raulerson v. Peeples, 81 So. 271 (Fla. 1919) (owner); Fla. Const. art. X, §4(a)(1) (2007); First Leasing and Funding of Florida, Inc. v. Fielder, 591 So. 2d 1152 (Fla. 2d D.C.A. 1992) (size and contiguity requirements). For a brief summary of homestead protection and its requisites in Florida, see John C. Cooper and Thomas C. Marks, Jr., Florida Constitutional Law: Cases and Materials 617-619 (4th ed. 2006).
19 Fla. Const. art. X, §4(a)(1) (2007). Within a municipality, the property can occupy no more than one-half acre of contiguous land and is limited to the residence of the owner or the owner’s family. Outside of a municipality, the property including the residence can occupy no more than 160 acres of contiguous land and improvements. Although the value of protected homestead exemption is unlimited, only that part of the debtor’s realty used as a residence is exempt from execution and levy. That part of the realty leased to other inhabitants is not exempt from levy and execution. See In re Englander,95 F.3d 1028 (11 Cir. 1996); Menard v. University Radiation Oncology Associates, LLP, 976 So. 2d 69 (Fla. 4th D.C.A. 2008); First Leasing and Funding of Florida, Inc. v. Fielder, 591 So. 2d 1152 (Fla. 2d D.C.A. 1992).
20 City of Jacksonville v. Bailey, 30 So. 2d 529 (Fla. 1947); Cain v. Cain, 549 So. 2d 1161 (Fla. 4th D.C.A. 1989); McGann v. Halker, 530 So. 2d 440 (Fla. 3d D.C.A. 1988); Dean v. Heimbach, 409 So. 2d 157 (Fla. 1st D.C.A. 1982).
21 Not only does Florida grant debtors homestead realty protection from forced sale pursuant to the Florida Constitution, there are many other exemptions from forced sale that are granted to debtors by statute. See Fla. Stat. §222.18 (2007) (disability income); Fla. Stat. §§222.13, 222.14 (2007) (life insurance policies and annuities); Fla. Stat. §§222.11, 222.15, 222.16 (2007) (wages of a head of a family); Fla. Stat. §222.21(2)(a) (2007) (pension and retirement plans).
22 After Havoco of America, Florida’s homestead protection can be viewed as both a shield and sword. The homestead realty exemption now protects a homestead acquired by a debtor using nonexempt assets with the intent to hinder, delay, or defraud creditors. Even before Havoco of America, many individuals used Florida’s protective homestead exemption to shelter their assets. One famous celebrity was O.J. Simpson, who was civilly sued after he was acquitted of murder in 1995. In 1997, a jury found him liable for wrongful death and ordered him to pay the victims families $33.5 million. He purchased a multi-million dollar home in Florida in 1996, because the value of homestead realty is unlimited and exempt from levy and execution by judgment creditors. Other celebrities included former Baseball Commissioner Bowie Kuhn, who sold his New Jersey home for $1,000,000 and moved to Ponte Vedra Beach just before his New York law firm became insolvent. Marvin Warner of the failed Ohio-based Home State Savings Bank sold his Ohio horse farm and purchased a 160-acre-horse farm outside of Coral Gables for $2,200,000. See Albert Crenshaw, Keeping Some Hiding Places, The Washington Post, March 20, 2005, at F01; Jackie Spinner, Bill Would Deny Bankruptcy Ploy to Rogue Executives, The Washington Post, July 12, 2002, at E03; David Morrow, Key to Cozier Bankruptcy: Location, Location, Location, The New York Times, January 7, 1998; Larry Rohter, Rich Debtors Finding Shelter Under a Populist Florida Law, The New York Times, July 25, 1993.
23 Havoco of America v. Hill, 790 So. 2d 1018 (Fla. 2001). See also Willis v. Red Reef, Inc., 921 So. 2d 681 (Fla. 4th D.C.A. 2006).
24 Chames v. Demayo, 972 So. 2d 850 (Fla. 2007); Havoco of America v. Hill, 790 So. 2d 1018 (Fla. 2001); Stewart v. Tramel, 697 So. 2d 821 (Fla. 1997); Butterworth v. Caggiano, 605 So. 2d 56 (Fla. 1992); Cross v. Strader Consti. Corp., 768 So. 2d 465 (Fla. 2d D.C.A. 2000); Robbins v. Robbins, 360 So. 2d 10 (Fla. 2d D.C.A. 1978).
25 See Fla. Const. art. XI, §§1, 2, 3, 4, 5, 6 (2007). law, an amendment must relate to a single subject before the electorate can vote to adopt its provisions.
26 Id. See also Advisory Opinion to the Attorney General re Referenda Required for Adoption and Amendment of Local Government Comprehensive Land Use Plans, 963 So. 2d 210 (Fla. 2007); Attorney General re Referenda Required for Adoption and Amendment of Local Government Comprehensive Land Use Plans, 938 So. 2d 501 (Fla. 2006).
27 Strand v. Escambia County,32 Fla. L. Weekly S587, September 6, 2007, as amended September 28, 2007. The Florida Supreme Court granted rehearing in Strand and is now considering whether to approve, modify, or recede from Strand and determine if a referendum is required for TIF paid from ad valorem taxation. The reader should keep informed on the outcome of Strand and TIF.
28 See State v. Green, 944 So. 2d 208 (Fla. 2006); Rotemi Realty, Inc. v. Act Realty Co., Inc., 911 So. 2d 1181, 1188 (Fla. 2005); State v. J.P., 907 So. 2d 1101 (Fla. 2004); Dorsey v. State, 868 So. 2d 1192 (Fla. 2003); Puryear v. State, 810 So. 2d 901 (Fla. 2002); State v. Gray, 654 So. 2d 552 (Fla. 1995); Haag v. State, 591 So. 2d 614 (Fla. 1992).
29 Public Health & Trust v. Lopez, 531 So. 2d 946 (Fla. 1988); Traeger v. Credit First Nat. Ass’n, 864 So. 2d 1188 (Fla. 5th D.C.A. 2004); Callava v. Feinberg, 864 So. 2d 429 (Fla. 3d D.C.A. 2003); Southern Walls, Inc. v. Stilwell, 810 So. 2d 566 (Fla. 5th D.C.A. 2002); Partridge v. Partridge, 790 So. 2d 1280 (Fla. 4th D.C.A. 2002).
31 See Glock v. Moore, 776 So. 2d 243, 251 (Fla. 2001); Fredman v. Fredman, 960 So. 2d 52 (Fla. 2d D.C.A. 2007), rev. den., 968 So. 2d 556 (Fla. 2007).
32 See Murphy v. Farquhar, 22 So. 681 (Fla. 1897); Taylor v. Maness, 941 So. 2d 559 (Fla. 3d D.C.A. 2006); Callava v. Feinberg, 864 So. 2d 429 (Fla. 3d D.C.A. 2003); Dean v. Heimbach, 409 So. 2d 157 (Fla. 1st D.C.A. 1982).
33 Anderson v. Anderson, 44 So. 2d 652 (Fla. 1950); Dep’t of Revenue v. Bush, 838 So. 2d 653 (Fla. 2d D.C.A. 2003).
35 Havoco of America v. Hill, 790 So. 2d 1018 (Fla. 2001); Butterworth v. Caggiano, 605 So. 2d 56 (Fla. 1992); In re Estate of Nicole Santos, 648 So. 2d 277 (Fla. 4th D.C.A. 1995); Robbins v. Robbins, 360 So. 2d 10 (Fla. 2d D.C.A. 1978).
36 Florida’s homestead exemption protection from forced sale appears to date back to the mid-1800s. See Fla. Const. art. IX, §§1-3 (1868); Fla. Const. art. IX, §§1-3 (1885). It was intended to prevent families and their heirs from losing their homes on account of unpaid debts. See Hill v. First National Bank of Marianna, 75 So. 614 (Fla. 1917); Milton v. Milton, 58 So. 718 (Fla. 1912); Palmer v. Palmer, 35 So. 983 (Fla. 1904); Miller v. Finegan, 7 So. 140 (Fla. 1890); Drucker v. Rosenstein, 19 Fla. 191 (1882); Davis v. Davis, 864 So. 2d 458 (Fla. 1st D.C.A. 2003); Bank Leumi v. Lang, 883 F. Supp. 883 (S.D. Fla. 1995).
37 Chames v. Demayo, 972 So. 2d 850 (Fla. 2007); Havoco of America v. Hill, 790 So. 2d 1018 (Fla. 2001); Stewart v. Tramel, 697 So. 2d 821 (Fla. 1997); Butterworth v. Caggiano, 605 So. 2d 56 (Fla. 1992); Robbins v. Robbins, 360 So. 2d 10 (Fla. 2d D.C.A. 1978).
38 See Martino v. Wal-Mart Stores, Inc., 908 So. 2d 342 (Fla. 2005); Department of Revenue v. Jackson, 846 So. 2d 486 (Fla. 2003); Andrews v. Palmas De Majorca Condominium, 898 So. 2d 1066 (Fla. 5th D.C.A. 2005); Wait v. Wait, 886 So. 2d 318 (Fla. 4th D.C.A. 2004); Conness v. Conness, 607 So. 2d 493 (Fla. 4th D.C.A. 1992); Blender v. Blender, 760 So. 2d 950 (Fla. 4th D.C.A. 1999); Maosola v. Lusskin, 727 So. 2d 328 (Fla. 4th D.C.A. 1999).
39 Chames v. Demayo, 972 So. 2d 850 (Fla. 2007); Havoco of America v. Hill, 790 So. 2d 1018 (Fla. 2001); Stewart v. Tramel, 697 So. 2d 821 (Fla. 1997); Butterworth v. Caggiano, 605 So. 2d 56 (Fla. 1992); Southern Walls, Inc. v. Stilwell, 810 So. 2d 566 (Fla. 5th D.C.A. 2002); Robbins v. Robbins, 360 So. 2d 10 (Fla. 2d D.C.A. 1978); In re Estate of Nicole Santos, 648 So. 2d 277 (Fla. 4th D.C.A. 1995). Even before Havoco of America, at least one appellate court ruled that the equitable defense of unclean hands did not form a basis for denying homestead protection against a devisee. See Monks v. Smith, 609 So. 2d 740 (Fla. 1st D.C.A. 1992).
40 Fla. Const. art. IX, §1 (a) (2007); Bush v. Holmes, 919 So. 2d 392 (Fla. 2006).
41 Chames v. Demayo, 972 So. 2d 850 (Fla. 2007). It is too early to tell if Chames will have a chilling effect on attorneys’ representing clients with few liquid assets in domestic relations cases. There is always the possibility that a marital estate will have realty other than homestead realty to be distributed to the parties, but homestead realty was and still is the major asset of the parties that can be sold by the parties upon the entry of a final judgment of dissolution of marriage (FJDM). After Chames, homestead realty is no longer subject to an attorney’s charging lien. Other possible attorney charging liens on marital assets that should not be impacted by Chames include nonhomestead realty, stocks and securities, cash accounts, and valuable personal property if they are not liquidated and sold by the parties before entry of a FJDM. A promissory note and mortgage can be executed by one spouse and recorded as a lien on homestead realty, but there is the possibility that in doing so on tenancy by the entireties realty at the onset of a FJDM, the mortgage may not be valid. Upon entry of the FJDM, however, the homestead realty will be owned as tenants in common by each party, and it can be argued that the note and mortgage became enforceable at that time. See Pitts v. Pastore, 561 So. 2d 292 (Fla. 2d D.C.A. 1990); Sudholt v. Sudholt, 389 So. 2d 301 (Fla. 5th D.C.A. 1980).
42 Freeman v. First Union National Bank, 865 So. 2d 1272, 1277 (Fla. 2004).
43 Id. See also Bankfirst v. UBS Paine Webber, Inc., 842 So. 2d 155 (Fla. 5th D.C.A. 2003); Beta Real Corporation v. Graham, 839 So. 2d 890 (Fla. 3d D.C.A. 2003); Yusem v. South Florida Water Management District, 770 So. 2d 746 (Fla. 4th D.C.A. 2000).
Harry M. Hipler is a sole practitioner in Dania Beach and practices in the areas of family law, commercial litigation, and municipal law. He received his J.D. in 1975 from the University of Florida, and an LL.M. in taxation from the University of Miami in 1981.
This column is submitted on behalf of the Family Law Section, Scott Rubin, chair, and Susan W. Savard and Laura Davis Smith, editors.