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Hold The Fort

Wednesday, July 9, 2014  
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Orlando REALTOR® | May/June 2014

Florida homestead provides
a sturdy fortress against
fraudulent asset transfer laws

By Erich Boughman

One advantage of purchasing a home in Florida is the homestead protection guaranteed by the Florida Constitution. Provided certain requirements relating to property features and ownership are satisfied, any principal residence in Florida is generally protected from forced sale without regard to value. Exceptions exist for the foreclosure of mortgages, construction liens, and tax liabilities but otherwise, whether a client owns a modest abode or a beachfront mansion, the equity is generally protected against creditors.

In the wake of the Great Recession, many people suffered severe losses and some continue to find themselves subject to creditors’ claims. Often, the first instinct is to try to “shelter assets” through transfers to family, friends, or protective structures such as retirement accounts or trusts. Like all states, however, Florida has “fraudulent transfer” laws that prohibit transfers to avoid creditors. Fraudulent transfers generally arise when an individual waits too long to engage in “asset protection.” To be effective, protective planning must be accomplished early — before claims arise.

One exception — and a salvation for debtors who haven’t properly implemented an asset protection plan — is the safe haven offered by Florida’s homestead protection. In the precedent-setting case of Havoco v. Hill, an out-of-state debtor being pursued by a creditor invested unprotected funds in a Florida home and claimed his intent to reside in Florida. The purchase appeared to represent a classic fraudulent transfer. Nevertheless, the Florida Supreme Court allowed the debtor to keep the home and established the principal that fraudulent transfer laws do not apply to homestead purchases.

Although it is more prudent to engage in asset protection before the need arises, for those who have not properly planned, Florida’s homestead protection offers shelter. The services of a REALTOR® in these situations can be crucial since any person subject to a judgment, whether or not a current Florida resident, can shelter liquid assets by purchasing and properly homesteading Florida property.

Eric Boughman, Pohl & Short, P.A. is a member of the Central Florida Real Estate Attorney’s Council and can be reached at He thanks his partner, Gary Forster, Esq., for contributing to this article. CFREAC provides this column on real estate law issues as a service to ORRA members to provide a general understanding of the law on various topic interest, not as a substitute for individual legal advice or consultation, and should not be relied on in specific situations without consulting with a real estate attorney. For more information, please visit



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