Declaration of Homestead: A Simple Way to Protect Your Home Equity

Declaration of Homestead: A Simple Way to Protect Your Home Equity

What a Declaration of Homestead is, what it protects against and who it protects



FLORIDA'S HOMESTEAD EXEMPTION PROVIDES AN EXEMPTION FROM FORCED SALE AND IS AMONG THE MOST PROTECTIVE IN THE USA. IT PROVIDES NO LIMIT TO THE VALUE OF REAL PROPERTY THAT CAN BE PROTECTED FROM CREDITORS.



What is a homestead?
A homestead is the house, boat or mobile home that a person lives in, and the land on which it sits. The property must be a person’s sole primary residence for it to be eligible for a homestead declaration. This may include a mobile home or manufactured home where the owner does not own the land that the mobile home is lying on. The term homestead also includes any improvements legally defined as ‘appurtenances’ to the land, such as a fence or any addition add-on’s. However, home furnishings and appliances are not eligible for a homestead declaration.



What is a Declaration of Homestead?
By signing a legal document known as a Declaration of Homestead, Floridians can protect an unlimited amount of their home equity from unsecured creditors as long as the home is a sole primary residence. Floridians can protect an unlimited value of a home against most creditors’ claims. For example, if a person incurs excessive credit card debt, the equity value of his/her home would still be protected from any lien or judgment. The only exceptions are a secured mortgage, tax lien or mechanics lien.



Limit on dollar value
The value of exempt equity for a homestead declaration is unlimited in Florida. The value of the property that can be protected is unlimited, so long as the property occupies no more than one-half acre within a municipality, or 160 acres outside of a municipality. If you sell or refinance the home, the proceeds of the sale or refinance may be protected. Sale proceeds are exempt from creditors’ claims for 180 days unless used to purchase a new homestead.



Who should sign?
Under Florida property law, a spouse has a “legal interest” in the property because of the marriage.
Therefore, both spouses should sign the homestead declaration for maximum protection.



When does the homestead declaration not provide protection from creditors?
There are specific instances in which the Florida law does not provide a homestead exemption. For example, if a creditor obtains a judgment against a homeowner before a homestead declaration is filed, the declaration may still protect the value, however, a person who performs repairs or other work on a home or who supplies materials for such work is allowed by law to place a lien against the home if payment is not received for services rendered or supplies provided. A financial institution holding a mortgage on the property also has a lien against the property for any unpaid balance on the house. A homestead declaration provides no protection for failure to pay the mortgage. A homestead declaration provides no protection in such cases.



When should I claim my Homestead Declaration?
Immediately upon purchasing a home in Florida



What is an Unsecured Debt?
Unsecured debts are debts which are not secured by collateral such as credit card debts, student loans, and medical bills. Most debts are unsecured. If an individual does not pay an unsecured debt, the court may permit the entity to which the debt is owed to attach certain real and personal property, such as your home, to recoup payment for the outstanding monies. If this happens, you must notify the court of your claim of homestead.



The Filing of a Declaration of Homestead Provides an Unlimited Amount of Protection to Residences
The filing of a Declaration of Homestead in the county in which the property is located is an inexpensive, easy and effective way for homeowners to increase the amount of protection on their homes. A Declaration of Homestead provides additional equity protection for homeowners by increasing the amount of unlimited protection per residence. The protection is not automatic and you must make the legal claim in order to be protected.



Florida Homestead Law Provides a Tax Assessment Reduction to a Primary Residence
Florida Law provides $50,000 of property tax reduction on the assessed value of a home. The tax assessment (or property tax exemption) reduction does not protect your home equity, nor does the tax exemption protect the value of a residence. It is simply a reduction in taxable value. Thus, it is suggested that homeowners file for additional homestead protection by filing a Declaration of Homestead.



Why does Florida allow this protection?
As a matter of public policy, the purpose of the homestead declaration is to promote the stability and welfare of the state by securing to the homeowner a home, so that the homeowner and his or her heirs may live beyond the reach of financial misfortune and the demands of creditors who have given credit under such law. Further, it is clear that the homestead provision is to be liberally construed in favor of maintaining the homestead property. As a matter of policy, our homestead protections have been interpreted broadly. In addition, the people further expanded homestead provision to substantially broaden the class of people eligible to take advantage of Florida’s homestead protections. While those protections had been previously limited to the "head of a family," they are now available to any "natural person" who may have legal or equitable title to a property. Finally, it is important to note that creditors are well aware of the homestead provision and its inherent protections. As the courts have stated, they will not narrowly interpret the homestead provision simply because "financially independent heirs" may receive a windfall. The homestead protection has never been based on principles of equity, but always has been extended to the homesteader and, after his or her death, to the heirs whether the homestead is a thirty room mansion or a one-room hut, and whether the heirs were rich or poor. Creditors have been on notice for many years that the plain language of the constitution protects homestead property from most creditors.



Reasons Why You Should File a Declaration of Homestead
1. The filing of a Declaration of Homestead is a quick, easy and inexpensive way to protect your property from creditors. Typically the Declaration can be quickly drafted and filed for a nominal fee and provides unlimited amounts of protection not automatically provided by law. We are happy to help take care of it for you.
2. The protections provided by the filing of a Declaration of Homestead generally extend to spouses and automatically transfer to surviving spouses and children who live in the home upon the passing of the signatory.
3. Declarations of Homestead do not need to be refiled should you refinance the property.
4. The protections provided by the filing of a Declaration of Homestead may extend to pre-existing debts, the proceeds of a sale, or a refinance.
5. Declarations of Homestead can protect multi-family homes and properties held in trust.



HOMESTEAD EXEMPTION
The homestead exemption offers virtually absolute protection from forced sale to meet the demands of creditors, except under special circumstances. The value of exempt equity for a homestead is unlimited in Florida. Take the steps to protect your home and its equity today by executing a homestead declaration!



For information on the Homestead Declaration Program, contact us below or call Florida Homestead Services today at (954) 252-9111 or if you would like more information, feel free to email us today at myhomestead@bellsouth.net if you have questions or would like to discuss how to take advantage of the home equity protection program.

Officials Urge Homeowner Participation in Homestead Filings

Officials Urge Homeowner Participation in Homestead Filings Florida Homeowner News, March 1, 2013 FORT LAUDERDALE--(FLORIDA HOMEOWNER NEWS) – March 1, 2013 – An official from Florida Homestead Services, LLC expressed concern today that a vast number of homeowners have not yet responded to the new, easier-to-file Designation of Homestead and Notice designed to protect their principal residences and home equity from unsecured creditors. "We've attempted to get out the information about the existence of the protection from creditors under the Florida Homestead Act, as well as to make known the law that allows the filing of paperwork to protect a homeowner's equity from creditors along with the benefits of the property tax exemption, which only creates a property tax break for the homeowner," one official was quoted as saying. "The whole idea behind this change was to make it easier to file, and although there are conditions that should be noted, it is still an important breakthrough for us." The conditions he was referring to involve the fact that even if a homeowner currently obtains or files for the homestead property tax exemption, there is still a misconception that the local county property tax exemption protects a homeowner from creditors. This can be of vital importance to a homeowner who anticipates a possible problem with a creditor or has a sudden, unexpected liability thrust upon them and wishes to have that home and its equity protected immediately. Allowing for the natural sequence of events could mean the difference between a home being protected from creditors or the homeowner losing their home's equity. One way to protect one's home would be to physically file the paperwork provided by the company, in addition to a form sent to any creditor in order to refinance or sell without paying any judgment liens, which would allow for the protection to take effect immediately instead of misunderstanding that the exemption takes effect on its own. A problem shared by a large number of homeowners is the fact that in many instances, the time and hassle needed to accomplish this is very difficult. Often, it involves travelling many miles to the County Seat in addition to concerns that the forms must be filled out correctly in order for the protection to take legal effect. One remedy strongly endorsed by the large number of homeowners who have used it is to take advantage of the services provided by Florida Homestead Services located on the web at www.floridahomesteadservices.com. They will be happy to take care of whatever the homeowner may need to accomplish this instant protection in a minimum amount of time with a minimum amount of hassle and no mistakes. Florida Homestead Services offers a two-fold service among many other services geared toward homeowners. They will fill out the forms properly and present it to you ready to be filed for a nominal fee. If you would also like to have Florida Homestead Services do the actual filing, the cost is included. Many homeowners have expressed their gratitude to Florida Homestead Services for offering this service. ###