Florida is generally considered a “debtor friendly” state. I know that may defy what all we hear about running the state like a business and having a strong ethic about everyone paying their debts.
But the framers of our state constitution, and the amenders and legislators after that, have taken the position that your homestead should be sacred. They too have included special legislative provisions limiting some of the means of garnishment. And during the terrible recession, people have suffered court judgments who would never have missed the first payment to a bank, assuming they had the means.
So judgments have been entered against people who own their homes. And with few exceptions, there is nothing the bank can do, if the property is their homestead.
Those exceptions include actual mortgages on the home, construction liens for improvements to the property, and real estate taxes.
But what happens when the homeowner wants to sell the homestead, and there is a judgment against the homeowner? The answer is he or she may sell it, and keep the money, if they follow certain steps.
Judgments are mostly entered under Chapter 55, Florida Statutes, in order to become a lien on real estate, once recorded. A homeowner may follow, exactly, section 222.01, Florida Statutes, to bypass the lien and sell the property.
To do this, the judgment lien must be for $500,000 or less. The homeowner must record a Notice of Homestead in the county where the homestead is located. The judgment must have been entered by a state court.
The clerk of court must send the notice by certified mail to the holder of the judgment, at the address in the judgment. The judgment holder has 45 days to initiate a challenge to the notice of homestead. If not filed by then, the sale or refinance may proceed.
The effect of this process is to then allow the owner 180 days to close on the sale or refinance of the homestead. If a challenge is filed by the judgment holder, either a bond will need to be posted to cover the judgment, or the sale or refinance has to be postponed until the challenge is concluded.
This process does not apply to liens related to support, welfare, or public defender liens.
The process is very detailed. It has been in effect since 2000 but only applied to liens up to $50,000; all others required a judicial determination. Now with the amount being raised to $500,000, the use of this tool may be more common.
Joe R. Boyd
TBR Legal Counsel
Board Certified Real Estate Attorney
Boyd & DuRant, P.L.