Can You Lose Your Homestead Exemption?
One of the greatest protections afforded to consumers who file bankruptcy in Florida is the homestead exemption. The homestead exemption allows a debtor to protect from bankruptcy or creditors any property or home up to a half of an acre (160 acres, if in a rural area). The debtor must have lived in Florida for 40 months or longer to get the protection. Florida’s homestead protections are so strong many people move to Florida to take advantage of the exemption.
There is a lot of debate over what is a homestead property, and how one makes property a homestead. But what isn’t talked about nearly as often is what happens when a homestead property is abandoned.
Losing the Homestead Exemption
Many times people temporarily move, or rent out their home. How far does someone have to go to have abandoned their homestead? This is a problem that can come up in bankruptcy. Imagine that you have to temporarily move, but you still own your homestead, and then have to file for bankruptcy. Will you lose the homestead exemption?
For you to lose the homestead exemption or protection, there must be a “strong showing” of your intent to abandon the homestead property. This means that the debtor doesn’t have to make a strong showing that he or she intends to keep property as homestead. It means that there has to be some indication that the debtor did not intend to keep the property as homestead.
That means that if there is any ambiguity, uncertainly, or it just isn’t completely clear, the court will assume that the property is homesteaded.
When Courts Will or Won’t Assume Abandonment
As a general rule, if you are forced to leave your homestead involuntarily, you will not be considered to have abandoned the property. So, for example, if finances, or damage to the home cause you to relocate a court will allow you to keep your homestead exemption.
You also don’t need to rent out your property. In some cases, property has been left vacant while someone was sick or in a hospital, and the court allowed the debtor to maintain the homestead exemption.
Even a long-term absence from property that is voluntary, such as a move for work, or to spend time living with a romantic partner, may not constitute abandonment if there remains an intention to eventually return to the homestead property.
What is the Intent?
And that’s the crux of the inquiry – is there an intention to ever return? Certainly, that takes more than someone just saying they intended to return. But there are things that someone does when they intend to return to homestead property. Maintaining the property, keeping it up to code, or keeping certain bills going to the property, all can evidence an intent to return to homestead property that the debtor is temporarily not living in.