Homestead Protection Of Property Owned By A Partnership
A Florida bankruptcy court recently ruled on a case involving a debtor who resided in a home that was deeded or titled in the name of a limited partnership. The limited partnership was owned by a corporation which is owned by the same debtor and who was the current occupant of the property.
The debtor argued that although she does not have legal title to the home, she has an equitable interest in the property as an indirect owner, and that her equitable rights in regards to the control the property is legally sufficient in order to protect the property under Florida's homestead laws. The bankruptcy court disagreed and ruled against the debtor ruling that the property is not the debtor's homestead because it is not owned by a natural person. We agree.
The court stated that in some circumstances, a debtor's indirect equitable interest is sufficient to qualify a residence as a homestead property. The court referred to a previous court decision which held that a trustee of a spendthrift trust for the beneficiary of the property's resident(s) could claim homestead on behalf of the trust beneficiary.