Florida’s “Unlimited” Homestead Exemption Can Be Limited in Bankruptcy: Recent 11th Cir. Case Addresses Limits

By: Thomas Zeichman June 23, 2020 7:12 am

Florida’s “Unlimited” Homestead Exemption Can Be Limited in Bankruptcy: Recent 11th Cir. Case Addresses Limits

Florida is known for many things: sunshine, beaches, and generous homestead protections. Stories abound of individuals moving to Florida, buying an opulent homestead, and blocking many judgment creditors from collecting. To address this perceived abuse, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act to place certain limits on the homestead exemption when a debtor files for bankruptcy. Recently the 11th Circuit in In re Graybill, 806 Fed.Appx. 920 (C.A.11 (Fla.), 2020) analyzed provisions of the Bankruptcy Code which limit the extent of Florida’s homestead protection and reduced the amount of the debtor’s homestead exemption that that case. This post discusses Florida’s homestead protection and certain limits in bankruptcy.

Florida’s Homestead: The Basics

Florida Constitution, Article X, Section 4 provides that, except for certain creditors (mortgage, mechanics lien, and certain taxes) your Florida homestead is exempt from forced sale by judgment creditors if your Homestead is one-half acre or less within a municipality or 160 acres or less outside a municipality. Florida does not place a dollar limit on the amount of the homestead that may be claimed exempt.

1,215 Day Homestead Exception under Section 522(p)

When you acquired your homestead before filing for bankruptcy matters. If the homestead interest within 1,215 days before filing for bankruptcy, then the exempt portion of the homestead is capped at the amount set by the Bankruptcy Code in section 522(p), currently $160,375.00. For example, the debtor, a single individual, purchases a $1,000,000.00 home in Florida for the first time with cash from a non-retirement brokerage account in May of 2019. A year later, after having a judgment entered against the debtor for breach of a promissory note in the amount of $5,000,000.00, the debtor files for bankruptcy. Because the debtor purchased the homestead within 1,215 days, the Bankruptcy Code under section 522(p) would cap the exempt value at $160,375.00 and the remainder would be available to creditors. Outside of bankruptcy the homestead in this example would be 100% exempt.

The 10 Year Fraudulent Transfer Exception Under 522(o)

How you paid for your homestead including improvements and debt reduction matters in bankruptcy. Under section 522(o), the value of the homestead is reduced if within the 10 year period prior to filing the bankruptcy the debtor obtained an interest in the homestead by disposing of non-exempt property with the intent to hinder, delay, and defraud a creditor. The 11th Circuit’s recent decision In re Graybill provides an example of this provision in action. In that case the debtor, after a judgment was entered against her, sold a vehicle and received $112,947.81 from the sale. The debtor then used $97,681.21 of the proceeds to payoff the balance on her mortgage. Thereafter, the debtor filed for bankruptcy and claimed her homestead 100% exempt. The bankruptcy trustee (the fiduciary appointed in a Ch. 7 bankruptcy case) objected to the debtor’s exempt on the basis that the non-exempt vehicle proceeds were used to pay down homestead mortgage. The bankruptcy court sustained the objection to the homestead exemption and reduced it by the amount of the proceeds used to pay down the mortgage.  The 11th Circuit Court of Appeals affirmed the bankruptcy court limiting the objection.


The recent record number of home transactions, new residents moving to Florida, and the sudden uncertainty in the economy may present challenges to claiming Florida’s homestead in bankruptcy. Alternatively, it may present opportunities for creditors to recover on their claims.


BMU+L Law has experiencing representing debtors, creditors, and bankruptcy trustees in litigation related to Florida’s homestead and other exemption claims. Contact us to learn more:

Thomas Zeichman, Esq., Partner and Chair of Bankruptcy & Restructuring Practice


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