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Florida Courts Divided Over Homestead Exemptions for Co-Ops

EstateAdmin

Florida provides a generous homestead exemption for its residents. This exemption means that most creditors cannot force the sale of a person’s primary residence in order to satisfy a debt. The homestead exemption also imposes certain restrictions on the “descent and devise” of a primary residence via a will or trust.

Judges Ask Supreme Court to Reconsider “Vitality” of 1978 Decision

But what if you own your residence as part of a cooperative, such as a co-op apartment? Does the homestead exemption still apply? Historically, the answer has been no. In a 1978 decision, In re Estate of Wartels, the Florida Supreme Court held that under then-existing state law, a co-operative apartment “may not be considered homestead property” for purposes of the descent and devise exemption. The Court’s reasoning was that a “homestead property must consist of an interest in realty,” and that someone who purchases a co-operative apartment “only receives shares in the corporation which holds title to the land on which the cooperative apartment building is constructed.”

In 2017, however, the Florida legislature amended the state’s co-op laws in a way that placed co-ops on the same footing as other types of realty interests, but only for purposes of the homestead exemption from property taxes. The law did not directly address the homestead exemption for devise and descent.

Recently, the Florida Third District Court of Appeal held that the Supreme Court’s 1978 Wartels decision continues to govern devise and descent cases. In this case, a daughter tried to claim the homestead exemption for her late mother’s co-op apartment. A creditor objected to the exemption.

The Third District sided with the creditor. The appeals court said it would “continue to adhere to the Florida Supreme Court’s decision in Wartels.” But the Court also noted there was a conflicting decision from its sister court, the Second District Court of Appeals. In a 2012 case, Geraci v. Sunstar EMS, the Second District said that a deceased person’s condominium “was homestead property for purposes of the exemption from forced sale.” Accordingly, the Third District certified the conflict to the Florida Supreme Court and asked it to determine whether its Wartels decision has “continuing vitality.”

Get Advice from a Qualified Lee County, Florida, Estate Planning Attorney

When the homestead exemption for descent and devise does apply, it is important to understand how this actually restricts you as the homeowner. Basically, if you have a spouse or minor children, you are required to leave your primary residence to your spouse. Any contrary language in your will or trust will be deemed invalid by the Florida courts. Your spouse then has the option of retaining a “life estate” in the homestead property or taking a 50-percent share as tenants in common with your children.

If you have additional questions about Florida’s homestead exemption and how it might affect your will or trust, call the Fort Myers estate and probate administration lawyers at the Kuhn Law Firm, P.A., at 239-333-4529 today to schedule a free consultation.

Sources:

scholar.google.com/scholar_case?case=8442938571530340765

scholar.google.com/scholar_case?case=2940278976434806276&

https://www.kuhnlegal.com/is-a-florida-estate-required-to-pay-final-medical-expenses-without-proper-documentation/

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