Florida Homestead Protection Law in Bankruptcy:

As I wind down my website, I thought I would include here an old article that would help attorneys and others understand Florida homestead protections in bankruptcy. Case law should be updated.

Attorney Seminar: Homestead

Jeffrey Solomon has written and presented seminar materials for continuing legal education credit about the new bankruptcy law. The materials below discuss changes that sometimes will restrict the unlimited Florida homestead. (Case law updates must be reviewed prior to relying upon the information provided.)


Introduction: BAPCPA made substantial changes which limit the ability of many debtors to protect their homestead. On April 20, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005(BAPCPA) was signed. The Reform Act took effect on October 17, 2005 for most matters. The Reform Act was immediately effective as to changes to the homestead exemption. The changes have a great impact on bankruptcies filed in Florida, where the homestead exemption has an unlimited amount of protection under state law. As an overview, 91-730-1215-10 are not a quarterback’s signals but represent specific time periods which should be understood to analyze homestead protection in bankruptcy.


1. Florida is an opt-out state. Simply stated and with some exceptions, this means that the Florida legislature has elected not to use the bankruptcy statute’s exemptions but to use exemptions based on Florida law.

2. 91: Under both prior and current law, a person can file bankruptcy in Florida by residing in Florida more than in any other state during the previous 180 days. Essentially, once a debtor resides in Florida for 91 days, venue is proper in Florida.

3. Prior law: The Florida resident can use the Florida exemptions.

4. 730: New law Sec. 522B(3)(A). Debtor may use Florida exemptions if domiciled in Florida for 730 days, if not, exemptions based on the law of the state where domiciled for most of the 180 days prior to two years before filing the petition. A debtor who has an unlimited homestead exemption under state law loses that exemption in bankruptcy unless the debtor was domiciled in Florida for more than 730 days.

5. Planning issue: Debtor might prefer another state’s exemptions or the federal exemptions that might apply to that state. Personal property exemptions are often lower in Florida. When the homestead issue is not involved, the debtor might prefer filing within two years.

6. Circular Issue: If we must look at the exemption law of the state where debtor previously resided, but that state?s law provides exemptions only apply to current residents and to property located in that state, and since debtor no longer resides in that state, do we use that state’s law or use federal exemptions because cannot use the previous state’s exemptions? Should the statute be construed as providing an artificial residence in the prior state? A “hanging paragraph” at the end of Sec. 522(3)(C) provides that “if the effect of the domiciliary requirement under subparagraph (A) is to render the debtor ineligible for any exemption, the debtor may elect to exempt property…” under the federal exemptions. This was precisely the holding in In re Underwood, 342 BR 358 (Bankr. N. D. FL 2006)(J. Killian). In re Crandall, 346 BR 220(Bankr. M.D. FL 2006) involved the issue of a current Florida resident, but under the new law the Court had to apply the law of New York. Judge Williamson found that New York exemptions only apply to New York residents, and the debtor was no longer a New York resident. Based on the hanging paragraph, the Florida debtor who was no longer eligible for the New York exemptions could use the federal exemptions. Accord, In re West, 352 BR 905, (Bankr. M.D. FL 2006)(J. Paskay), In re Jewell, 347 BR 120 (Bankr. W.D. N.Y. 2006), and In re Battle, 2006 Bankr. Lexis 3522(W.D. Tex Dec. 12, 2006). Battle involved a Florida resident who moved to Texas. The Court held that federal exemptions applied based on Sec. 222.20, FL.Stat.(that the opt-out provision of Florida exemptions applied only to Florida residents) and on an earlier Florida bankruptcy case, In re Schulz, 101 BR 301(Bankr. N.D. Fla 1989).

7. Non-resident aliens are not entitled to use Florida exemptions from creditors. As a result, they can use federal exemptions. If a debtor has a green card for two years, the debtor can use the Florida exemptions.


1. Overview: Sec. 522( p) and (q); 730-1215

A debtor who has not resided in Florida for 730 days cannot use Florida’s homestead or other exemptions. The new law provides two additional time periods relating to length of residence. Between 730-1215 days, the debtor can use Florida’s exemptions, but the amount is limited to $125,000.00. Only if the period is greater than 1215 days may the debtor receive the benefit of the unlimited Florida homestead exemption.


Section 522(p)(1) provides: “Except as provided in paragraph(2) of this subsection and sections 544 and 548, as a result of electing under subsection (b)(3)(a) to exempt property under State or local law, a debtor may not exempt any amount of interest that was acquired by the debtor during the 1215-day period preceding the date of the filing of the petition that exceeds in the aggregate $125,000 in value in…

d. real or personal property that the debtor or a dependent of the debtor claims as a homestead.”

The statute permits a rollover of the proceeds from a sale of a prior residence:

Section 522(p)(2)(A) provides:

“For purposes of paragraph(1) any amount of such interest does not include any interest transferred from a debtor’s previous principal residence(which was acquired prior to the beginning of such 1215-day period) into the debtor’s current principal residence, if the debtor’s previous and current residences are located in the same state.”

NOTE: THE $125,000.00 amount is subject to adjustment based on inflation. As of April 1, 2007, the amount increased to $136,875.00. As of April 1, 2010, the amount increased to $146,450.00.

2. Husband and wife: Two exemptions? Sec. 522(m) permits the doubling of federal bankruptcy exemptions, more specifically, each spouse can claim the exemption. If there is a joint filing, is the total homestead exemption $125,000 or $250,000? Based on Sec. 522 (m), argue each spouse entitled to $125,000.00. Judge Williamson rejected the use of 522(m) because it only applied to exemptions contained under this “section”, meaning the federal exemptions in Section 522, and Florida is an opt-out state. However, the court construed Florida law to allow each spouse to claim $125,000.00 as exempt. In re Rasmussen, 349 BR 747 (Bankr. M.D. FL 2006). Also see In re Chouinard. 358 BR 814(Bankr. M.D. FL Dec. 20, 2006), and In Re Limperis, 2007 Bankr. Lexis 1888(Bankr. S. D. FL May 9, 2007)(J. Olson).

3. Tenancy by the entireties law was not changed. Florida law has long recognized that a creditor of one spouse may not seize assets jointly held as husband and wife as a tenancy by the entireties. BAPCPA did not change this protection. See Judge Williamson’s decision in In re Buonopane, 349 BR 346(Bankr. M.D. FL Jan. 26, 2007). Though the equity was more than $125,000.00, the property remains exempt or immune based on tenancy by the entireties, except to the extent of joint creditors (all courts may not agree on this limitation as joint creditors). Additionally, one court concluded that even if the debtor had not resided in Florida for 2 years, the debtor could still claim that the residence was exempt as tenancy by the entireties. In re Schwarz, III, 362 BR 532(Bankr. SD FL 2007)(Judge Olson). Also see Judge Friedman?s decision in In re Wagstaff, 2006 Bankr. Lexis 716 (Bankr SD FL March 17, 2006), and see In re Robedee, 2007 Bankr. Lexis 1889(Bankr. SD FL 2007)(Judge Olson).

4. Statutory Construction.

a. Does the statute really mean what it says? For a discussion of general issues of statutory construction, see the opinion of Judge Robert A. Mark, in the Southern District of Florida, in In re: Elona Kaplan, 331 B.R. 483 (Bankr. S. D. FL 2005), which held that the new statute as to homestead does apply to Florida based on the clear intent of Congress despite poor drafting, rejecting the decision in In re: McNabb 326 B.R. 785 (Bankr. D. Ariz. 2005). (McNabb held that because the state had opted out of the bankruptcy exemptions, the debtor cannot make an election, so the new statutory limit does not apply in an opt-out state).Also see In re Landahl, 338 BR 920 (Bankr. M.D. FL 2006)(J. May), and In re Kane, 336 BR 477 (Bankr. Nev. 2006)(closing the mansion loophole).

b. What if there were two prior sales of the homestead? In the case In re Charles H. Wayrynen, 332 BR 479 (Bankr. S.D. FL 2005), Judge Steven H. Friedman also reviewed the new homestead provisions. The Court considered the arguments that were raised in McNabb and Kaplan as to whether the Sec. 522(p)(1) cap of $125,000 applies in Florida. In Wayrynen, both the current principal residence and the prior residence were purchased within 1215 days. The debtor had a second previous residence that was sold to purchase the prior residence which was sold to purchase the current residence. The second prior residence was acquired more that 1215 days before filing the petition. The trustee argued the current homestead was not protected because the statute only refers to one previous residence. The court held against the trustee and concluded that the safe harbor of Sec. 522(p)(2)(B) protected the equity including appreciation derived from the ownership of the second prior Florida homestead property. (The court was not presented with the issue of appreciation of $125,000 during the previous 1215 days but on appreciation that occurred prior to the 1215 days from the second previous principal residence. See other cases cited below). Judge Friedman entered another opinion based on its Wayrynen holding. In re Wagstaff, 2006 Bankr. Lexis 716 (Bankr SD FL March 17, 2006), finding that the $125,000 homestead cap applies to residences purchased within 1215 days.

Careful reading of the elements of the statute has created a need for difficult statutory construction. What is “an interest that was acquired by the debtor during the 1215 day period? ” There is now case law addressing the issue of what is an “interest” and what does it mean to “acquire”.

c. Appreciation:

What if property appreciated in value more than $125,000.00 during the previous 1215 days even though it was owned more than 1215 days? Is appreciation an interest that is acquired?

i. See In re Blair, 334 BR 374 (Bkrtcy. N.D. Tex. 2005), holding that the appreciation is exempt.

ii. Judge Briskman in the Middle District of Florida addressed both of these issues in In re Sainlar, 344 BR 649 (Bankr. M.D. FL 2006). A creditor objected to the claim of exemption. Judge Briskman reviewed definitions of acquired and interest and concluded that the Section 522(p)(1) term “interest that was acquired” means the acquisition of ownership of real property. Title is acquired, not equity. Appreciation was not an acquired interest so it was exempt. The court also concluded that legislative history, though unnecessary to review, also supports this conclusion.

iii. Judge Williamson in In re Rasmussen, 349 BR 747 (Bankr. M.D. FL 2006), made a thorough review of the appreciation issue and made a grammatical analysis of Section 522(p). In this case, the homestead was acquired within 1215 days. The court concluded that the increase in equity of more than $125,000 did not occur due to any act of the debtor and was not an acquisition of an interest by the debtor. Additionally, legislative history reflects that the intent of Congress was not to attach passive appreciation in homestead. Also see In re Chouinard. 358 BR 814(Bankr. M.D. FL Dec. 20, 2006) which followed Rasmussen.

iv. And what if the increase in equity was based in part on the reduction in the principal balance of the mortgage from the payments of regular mortgage payments? Realistically, this would not amount to $125,000.00, but this amount is acquired by the debtor’s payments and is treated differently than appreciation. See Rasmussen and Sainlar.

d. When is an interest acquired?(How do we determine if 730-1215 or over 1215?)

This concept is often over-looked. Consider a change in status of the property. What if a Florida resident acquired the property more than 1215 days prior to filing, but only recently moved into the property and claimed it as the homestead?(or only recently obtained a green card?) The statute does not expressly require that the property be owned as homestead for more than 1215 days.

1. See In re Greene, 346 BR 835(Bankr. D. Nev. 2006). Debtor, a Nevada resident, purchased real property more than 1215 days prior to filing bankruptcy but did not move to the property and did not declare it as homestead until within the 1215 day period. The Court held that the homestead status was a separate interest in real property acquired within 1215 days, so the exemption was limited to $125,000.00.

2. Compare In re Rogers, 354 BR 792(D Ct. N.D. Tex. 2006), which rejected Greene. An “interest” in property under this section refers to a legal or equitable interest that can be quantified with a monetary figure, so homestead is not an interest that is acquired. As a result, property owned more than 1215 days is fully exempt as homestead even though it did not become homestead until within the 1215 day period. The “interest” analysis utilized the reasoning in Rasmussen, Also see Lyons below.

3. An interesting case is In re Leung 311 BR 626(Bankr. E.D. Mass. Dec. 6, 2006). Debtor and wife bought the property in 1988. Debtor deeded his interest to his wife more than 1215 days prior to filing. Wife deeded back jointly to wife and debtor less than a year prior to the bankruptcy. The court rejected equitable ownership arguments and concluded the debtor?s interest was acquired during the 1215 days. But see In re Walsh, 359 BR 389(Bankr D Mass Jan. 11, 2007)(though debtor had transferred interest to non-debtor spouse, the spouse had homestead interest more than 1215 days and could assert the full exemption).


Under Florida law, a debtor can use assets that are not exempt from creditors, buy a home or pay the mortgage in advance, and keep the homestead even if there are creditors.

Sec. 522(O) creates a new ten year fraudulent transfer period as to the homestead. The homestead exemption shall be reduced “to the extent that such value is attributable to any portion of any property that the debtor disposed of in the 10 year period…with the intent to hinder, delay , or defraud a creditor and that the debtor could not exempt…” For cases applying this statute, See In re Lacounte, 342 BR 809 (Bankr. D. Mont. 2005). This case was filed on April 21, 2005, one day after the effective date of BAPCPA as to homestead. Also see In re Sissom, 2007 Bankr Lexis 1683(Bankr. S. D. TX May 11, 2007), and In Re Agnew, 355 BR 276(Bankr. D. Kan. 2006)

Also consider this issue in the context of the topic discussed above as to transfer of status of the property. Is changing the status of property from non-exempt to exempt subject to the 10 year fraudulent transfer? Case law already supports that transfer of status is not a fraudulent transfer. In re Lyons, 2006 Bankr. Lexis 3230(Bankr. D. Mass. Nov. 22, 2006), relying in part on Rasmussen, and Rogers, held that it was not a fraudulent transfer to file a declaration of homestead within 1215 days even though the property was owned more than 1215 days.

Note that Sec. 522(q) creates a new restriction of $125,000 on the homestead for securities and similar violations and for causing serious physical injury or death with the requisite intent. In re Larson, 340 BR 444 (Bankr. D. Mass 2006) recognized that a formal conviction is not required.

Leave a Reply

Your email address will not be published. Required fields are marked *