Single Family versus Multi-Family Home… Is Homestead Creditor Protection Available for Beneficiary if Owner Rented Rooms prior to his Death?

Single Family versus Multi-Family Home… Is Homestead Creditor Protection Available for Beneficiary if Owner Rented Rooms prior to his Death?

Single Family versus Multi-Family Home… Is Homestead Creditor Protection Available for Beneficiary if Owner Rented Rooms prior to his Death?  

In the recent case, Anderson v. Letosky, the District Court of Appeal for the Second District determined that a beneficiary of an owner who rented rooms in his house was entitled to the homestead protected at the owners death.

Richard Anderson (“Father”) owned a house at his death. His son, Richard Anderson, II (“Son”) petitioned the court to determine that the house was homestead and thus, exempt from creditors, pursuant to Florida constitutional law.

Creditors of the Father filed a statement of claim in the estate for $38,551.00.

The lower court, based on the case, In Re Bornstein, determined that the homestead lost its protection because Father had rented out 3 bedrooms in his house. Thus, 75% of the house was determined to NOT be protected homestead and 25% was determined to be protected homestead (apparently there were 4 bedrooms). Thus, the creditor could recover from the 75% that was not protected homestead.

Son appealed pro se (without an attorney) and argued that 100% of the homestead was protected. The appellate court noted that homestead protection is to be liberally construed in favor of protecting homestead.

The court then reviewed the case, First Leasing & Funding of Florida, Inc. V. Fiedler. In First Leasing, a creditor filed a claim against the homestead, a triplex for which the owner rented to tenants. The owner lived in a portion of the triplex and other portions were rented. The triplex was a “one-story structure with units horizontally situated and separate mailing addresses were maintained at each unit.”

The First Leasing court suggested a two-part analysis. First, determine whether the residence is a fraction of the entire property and second, whether the property can be severed… “by using an imaginary line the residence can be severed from the remainder of the property.”

The appellate court determined that Father owned the whole residence, the bedrooms were all in the one residence and the rented bedrooms could not be severed from the residence by an imaginary line without destroying its utility as a single-family residence.

The appellate court determined the whole residence was homestead and also stated “[i]n the century which has passed since the enactment of Florida’s first homestead exemption clause in 1885, not a single reported case has declared a residential unit occupied by the owner as his family home to be non-exempt simply because the owner conducted business activities within those premises.”

ADVICE: This case makes clear that if an owner rents out the bedrooms in their home, such rental does NOT destroy the devise homestead protection of the Constitution. However, be careful on how far an owner can “push” the envelope. What about a duplex that uses the same mailing address? Can the property be “severed” with that “imaginary line”?

WORD OF THE WEEK: Immunity is any exemption from a duty, liability or service or process. For example, executive immunity is the absolute immunity for the U.S. President or a state governor from civil damages for actions that are within the scope of official responsibilities.

GENEROSITY IS A KEY TO HAPPINESS…REACH OUT AND HELP SOMEONE TODAY! 😎