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.