Is Commercial Activity on Florida Homestead Permissible?

Waiting for a hearing to be called in bankruptcy court I had a conversation with an attorney who was litigating a Florida homestead issue. The question was whether a debtor who owned a duplex and occupied one of the two units could exempt the entire property under Florida’s homestead exemption. The general issue is whether homestead protection is lost when an owner uses part of the property from rental or other income producing commercial purposes.

The answer to the question may depend on whether the homestead is located in a municipality or in the county. Although the most important city/county difference is the permissible size of the homestead property ( ½ acre city and 160 acres county). the location difference also affects the extent of permissible commercial uses. The Fourth District Court of Appeal decided a case in 2004 on point. The Court found that the Florida Constitution limits the definition of homesteads within a city to properties used as the residence of the owner and the owner’s family; inside a municipality any part of a property used commercially may not qualify as homestead. The Court explained that properties outside a municipality are not limited in use to the residence of the owner and his family. In the particular case, the Court granted homestead protection to a large mobile home park located in the county because the park’s owner resided on a small portion of the property.

Davis v. Davis 864 So 2d 458

posted by Jonathan Alper, asset protection and bankruptcy lawyer, Orlando, Florida