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Saturday, August 9, 2008

Florida Homestead Law Myth-Understood

Yesterday afternoon I was perusing the Monroe County Clerk's website checking to see how many more properties had Lis Pendens filed since July 22nd. One choice address popped up and I did decided to look further. A Lis Pendens is a legal document filed by a party claiming a potential interest in real property. The Lis Pendens is notice to the world that the party who filed the notice claims an interest in the property that is adverse to the owner of the property.

In Florida a Lis Pendens is a pre-requisite to the commencement of foreclosure on a mortgage, foreclosure of a mechanic's or materialman's lien, or the foreclosure of a lien created by operation of law such as a judgment.

When I saw that particular Lis Pendens and the address of the property I immediately looked to see if the property was currently listed for sale. Sure enough it was. But I was surprised to see that the asking price is considerably high for this present market. The price is high compared to the amount of loans against the property. I thought that perhaps the listing agent was attempting to do a short sale without advertising the fact to the world.

I called the listing agent. The agent was totally surprised by the information that a Lis Pendens had been filed. The agent queried if I had identified the correct property since the owner owns other properties in the area. I answered that I had checked the legal description. I asked if the property was a short sale. I was told the opposite: that the owner has been discussing raising the asking price. I was dumbfounded. I told the listing agent that the Lis Pendens is the first step to the commencement of foreclosure.

The listing agent told me that the property was homesteaded and that the lender could not foreclose. The agent said the owner had already talked to bankruptcy counsel. The homesteaded property is not safe from foreclosure. End of story. Maybe the listing agent thought I was trying to interfere. I wasn't.

I am not a Florida attorney so do not deem what I write as advice from a lawyer. If you or someone you know is facing foreclosure and your property is homesteaded, consult a licensed Florida attorney to explain how Florida's Homestead exemption applies to you. Don't ask a Realtor. The Realtor may be wrong.

The Florida State Constitution "protects a person’s homestead residence from forced sale under process of any court. That section clearly states that no judgment or execution shall become a lien on homestead property." There are specific rules which must be complied with to attain the protection of the homestead exemption. CLICK HERE to read a brief and clear explanation of Florida's homestead law as reported by Jonathan B. Alper, P.L.C.

ARTICLE X, Section 4 of the Florida Constitution states: "SECTION 4. Homestead; exemptions.--
(a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person The homestead exemption does not protect homeowners who failed to make mortgage payments on principal residences even if the owner filed a homestead exemption..."

The bold print above preserves the right of a lender to foreclose its mortgage against a defaulting borrower, even one who homesteaded his property.

The family home is the largest asset for most people. Don't make a foolish mistake and make decisions based on what you think the law is or what someone told you or what you read on the internet or in a self-help book.

My advice: see a lawyer when you have a legal problem. See a Realtor when you want to sell a house. Don't confuse the two.

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Gary Thomas in a Nutshell

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Key West, Florida, United States
I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.