Equitable Liens and Homestead Protections in Florida

The State of Florida is known for many things – one of those things is its strong homestead protections for homeowners. These protections, found in Article X, Section 4, of the Florida State Constitution can help a homeowner protect their residence from attachment of judgment liens and a forced sale by creditors. A recent decision from Florida’s Fourth District Court of Appeal discussed these protections and how far they can go.

In Renda v. Price, 47 Fla. L. Weekly D1589 (Fla. 4th DCA July 27, 2022), Joseph Price was injured by a towing company and brought a lawsuit against the towing company as a result of the injuries he suffered. He eventually obtained a money judgment. When the lawsuit was filed, the tow company held two life insurance policies against the owner of the towing company. It also owned several commercial properties. During the pendency of the lawsuit, the tow company changed the beneficiary on the life insurance policies from the owner to his wife, Rose Renda. It also conveyed title of the commercial properties to four limited liability companies, with Renda as the beneficiary. Not long after, the owner passed away and Renda received the life insurance proceeds, which were placed in her personal bank account. She also sold the commercial properties and then used the proceeds, along with the insurance proceeds, to purchase a new residence, which became her homestead residence. After Price obtained a judgment against the tow company, it sought to proceed supplementary and alleged that the transfers from the tow company and its then owner Renda were fraudulent. The trial court voided the sales of the commercial properties and ordered that they be auctioned by the sheriff. It also placed an equitable lien on Renda’s homestead residence, which represents the amount of funds that were transferred from the business. However, the Court would not permit foreclosure of the equitable lien based on the strict interpretation of Article X, Section 4.

An appeal followed, wherein the Fourth DCA held that foreclosure of an equitable lien is permitted where the homestead property is purchased with funds obtained through fraud. It is important to note that there are exceptions to Florida’s Homestead law, which Renda sought to enforce. The payment of taxes and assessments; obligations contracted for the purchase, improvement, or repair to the homestead residence; or obligations contracted for house, field, or other labor performed on the homestead are except. If a lien is placed on the homestead residence for any of these reasons, that lien can be enforced through foreclosure or other court process. In Renda, none of these exceptions were met. However, the Court, following other judicial decisions, found that an equitable lien can be foreclosed when the property is purchased with funds that are obtained through fraud. To hold otherwise would result in unjust enrichment.

If you have any questions about equitable liens, Florida’s homestead protections, and how they may impact your ability to enforce a judgment or mortgage, please do not hesitate to contact one of the lawyers at SVL for legal advice.

Bankruptcy Update

When the COVID-19 Pandemic hit in 2020, followed by the subsequent moratoriums, stimulus checks, and cratering interest rates, bankruptcy filings across the board plummeted. Since 2020, we have expected bankruptcy filings to eventually start increasing; however, they never have. Even with all the lockdowns, war in Ukraine, inflation and interest rates rising – the number of bankruptcy filings have not moved. Regardless, have we reached the bottom? And are we seeing a new trend of increases?

For the first time in months, bankruptcy filings increased across all chapters in August. Bankruptcy filings, including all chapters, increased 10% from August 2021; commercial filings increased 6% for the same period; and individual filings increased 10% as well. Filings in all three districts in Florida are up month over month and Georgia is seeing the same trend. While this is only a small sample size, the lesson here is to be on alert and ready to pivot and adapt accordingly if these trends continue. If we’ve learned one thing the last two years, its that being able to quickly adapt is a huge asset. If you have any questions on your bankruptcy (or collections department in general) policies and procedures, please let us know and we can help you tailor these to meet your needs.

Retirees Breathe a Sigh of Relief

With Florida being the retirement destination for many people, the recent In Re Smith case out of the 10th Circuit will put a large portion of our population more at ease. A debtor filed for chapter 7 bankruptcy and listed his 17-year-old golf cart as an exempt motor vehicle under state law in Oklahoma. The Trustee objected, stating that a golf cart is not a motor vehicle and the Court had to resolve this case of first impression.

The Debtor stated that he is unemployed and has no traditional automobile. Furthermore, he stated that the golf cart was his only means of transportation. He used it for shopping and other errands and borrowed his father’s pickup if he needed to go on a longer trip. Under Oklahoma (and Florida) law (plus the dictionary definition), the definition of a golf cart is a motor vehicle that is designed and manufactured for operation on a golf course for sporting or recreational purposes, and that is not capable of exceeding speeds of 20 miles per hour.

The Court found this definition of very little help, because golf carts are “capable of transporting people and property for many other purposes other than on a golf course.” If you have ever been to 30A or another beach or retirement town, you know this is true as they are an ever-increasing form of transportation. The Court stated that a golf cart falls under the meaning of a “motor vehicle” in some instances, but for others it does not. Judge Loyd relied on 10th Circuit precedent, which calls for liberally construing exemptions given their humanitarian purpose and granted the exemption for the Debtor.

If you have any questions involving bankruptcy, golf carts, or any other matter, please reach out to us at (850) 388-0500.

Making a Difference

We kicked off the new school year by “adopting a teacher” at a local elementary school. SVL donated school supplies, not only to some second graders, but also many essential items for the teacher as well! The amount of crayons, markers, glue sticks, backpacks, and so much more, was sufficient to share with other classrooms too. We cannot wait to participate in more projects like this to assist our community in the future. It was amazing to see our employees stepping up in such a huge way to help those in need.

Out of Office

On Saturday, August 13th, SVL held a “firm social” at a local hangout in Tallahassee called District 850. The employees brought their significant others and children to the event. It was awesome to get together as a team to spend time with each other away from the work environment. The SVL gang and their families enjoyed competitive bowling, laser tag, and endless arcade games. We are already looking forward to our next social get-together!