9 FLA. CONST. art. VII, § 6(a). "Every person who has the legal or equitable title to real estate and maintains thereon the permanent residence to the owner, or another legally or naturally dependent upon the owner, shall be exempt from taxation thereon, except assessments for special benefits, up to the assessed valuation of five thousand dollars, upon establishment of right thereto in the manner prescribed by law. The real estate may
be held by legal or equitable title, by the entireties, jointly, in common, as a condominium, or indirectly by stock ownership or membership representing the owner's or member's proprietary interest in a corporation owning a fee or a leasehold initially in excess of ninety-eight years.
(b)Not more than one exemption shall be allowed any individual or family unit. . .
(c)By general law and subject to conditions specified therein, the exemption shall be increased to a total of twenty-five dollars of the assessed value of the real estate for each school district levy. . ."
10 For many practitioners in Florida, the limitations on the devise and derived exemption of the homestead are, in the words of estates and probate expert Rohan Kelley, "[in the] mist and darkness of chaos."
11 Seiden at 920.
13 Crosby & Miller at 14.
14 John Shapo, Restraints on Alienation and Devise of Homestead: Monsters Unfettered from Florida's Past, 19 U. MIAMI L. REV. 72, 74 (1964).
15 Seiden at 919.
16 Maines & Maines, 30 U. FLA. L. REV. 2, 229 (1978).
17 Crosby & Miller at 14. See also Wakeman v. Noble, 73 So. 2d 873, 874 (Fla. 1954)(en banc)("the purpose of homestead provisions is simply to shelter the family that lives or survives"); In re Meola, 158 B.R. 881, 882 (Bankr. S.D. Fla. 1993)(Florida homestead protection is designed to secure for the householder a home for himself and his family – regardless of his financial condition); In re Kelley, 21 B.R. 375, 376 (Bankr. M.D. Fla. 1982)(Florida's homestead law is based on public policy considerations designed "to promote the stability and welfare of the state by encouraging property ownership and independence on the part of the citizen).
18 In re Estate of Milisi, 440 So.2d 584 (Fla. 4th DCA 1983).
19 FLA. CONST. art. X, sec. 4(a)(2). There shall be exempt from forced sale under process of the court. . .(2) Personal property to the value of $1,000.
20 FLA. CONST. Art. X, § 4.
21 See e.g., Milton v. Milton, 63 Fla. 533, 58 So. 718, 719 (Fla. 1912)(overruled in part by Pasco v. Harley, 73 Fla. 819, 75 So. 30 (Fla. 1917).
22 Milton, 58 So. At 719.
23 11 U.S.C. §548(a)(1)(A) (2002).
The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, if the debtor voluntarily or involuntarily (A) mad such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted;. . .(emphases added).
24 Palm Beach Savings & Loan Association F.S.A. v. Fishbein, 619 So.2d 267 (Fla. 1993); Orange Brevard Plumbing & Heating Company, 137 So.2d at 203; Hillsborough Inv. Co. v. Wilcox, 152 Fla. 889, 891, 13 So.2d 448, 450 (1943).
25 Mith v. Gluckenheimer, 42 Fla. 1, 37, 27 So. 900, 911 (Fla. 1900).
26 Florida Home Sales, Median Price Soar, FLA. BAY BUS. J., (Oct. 27 2003) available at http:// www.tampabaybizjournals.com/tampa/stories/2003/10/ 27/daily5.html
(last visited Mar. 11, 2004). In the Tampa-St. Petersburg-Clearwater market, the median sales price for single-family existing homes in 2003 was $148,800. The national median sales price for existing single-family homes in 2003 was $177,500.
27 Timothy D. Moratzka, The "Castle" Under Attack: Homestead and Bankruptcy, available at http://www.mcmlaw.com/pubs/592259
(last visited Apr. 4, 2004).
28 Crosby & Miller at 18.
31 FLA. STAT. § 222.01(1) Whenever any natural person residing in this state desires to avail himself or herself of the benefit of the provisions of the constitution and laws exempting property as a homestead from forced sale under any process of law, he or she may make a statement, in writing, containing a description of the real property, mobile home, or modular home claimed to be exempt and declaring that the real property, mobile home, or modular home is the homestead of the party in whose behalf such claim is being made. Such statement shall be signed by the person making it and shall be recorded in the circuit court.
(2) When a certified copy of a judgment has been filed in the public records of a county pursuant to s. 55.10, a person who is entitled to the benefit of
the provisions of the State Constitution exempting real property as homestead and who has a contract to sell or a commitment from a lender for a mortgage on the homestead may file a notice of homestead in the public records of the county in which the homestead property is located. . .
42 FLA. CONST. art X, §4(c).
"The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner's spouse if there be no minor child. The owner of the homestead real estate, joined by the spouse if married, may alienate the homestead by mortgage, sale or gift, and, if married, may deed transfer the title to an estate by the entirety with the spouse. If the owner or spouse is incompetent, the method of alienation or encumbrance shall be as provided by law."
43 Richard V. Butler and Scott M. Gilpatric, A Re-Examination of the Purposes and Goals of Bankruptcy, 2 AM. BANKR. INST. L. REV. 269, 269, (Winter 1994).
44 U.S. CONST. art. I, section 8(4) [Congress shall have the power. . .] To establish an uniform rule of naturalization, and uniform laws on the subject of bankruptcies and throughout the United States.
45 In re Huckfeldt, 39 F.3d 829,830 (8th Cir. 1994).
46 See Lines v. Frederick, 400 U.S. 18, 19, 91 S.Ct. 113, 114, 27 L.Ed. 2d 124 (1970).
48 11 U.S.C. §362 (2002). Under Section 362, no new liens may be created, all collection must stop, and the creditor is not allowed to setoff any debt owning to the debtor that arose before the commencement of the case.
49 H.R.Rep.No. 595, 95th Cong., 1st Sess., reprinted in 1978, U.S. Code Cong. & Ad. News 6296-7.
53 Hormsy v. Floyd (In re Vitek, Inc.) 51 F.3d 530, 535 (5th Cir. 1995). A "race to the courthouse. . .offends one of the most fundamental policies underlying bankruptcy law: preservation of the debtor's estate and the status quo ante long enough to allow a fair, ratable, systematic liquidation of the estate's assets among all claimants."
54 Butler & Gilpatric at 270.
55 Elizabeth Warren, Bankruptcy Policymaking in a Imperfect World, 92 MICH L. REV. 336, 346 (1993)
56 11 U.S.C. §522(b)(1)(2002).
(b) Notwithstanding section 541 of this title, an individual debtor may exempt from property of the estate the property listed in either paragraph (1) or, in the alternative, paragraph (2) of this subsection. . .
(1) property that is specified under subsection (d) of this section, unless the State law that is applicable to the debtor under paragraph (2)(A) of this subsection specifically does not so authorize;
57 11 U.S.C. §522(d)(1)(2002).
58 FLA. STAT. § 222.20 (2004) In accordance with the provision of § 522(b) of the Bankruptcy Code of 1978, residents of this state shall not be entitled to the federal exemptions provided in § 522(d) of the Bankruptcy Code of 1978. Nothing herein shall affect the exemptions given to residents of this state by the State Constitution and the Florida Statutes.
59 In re Evans, 51 B.R. 47,50 (Bankr.D. Vt. 1985).
60 John M. Norwood and Marianne M. Jennings, Before Filing Bankruptcy, Move to Florida and Buy a House, 28 SW. U.L. REV. 439, 442 (1999).
61 Compare Havoco v. Hill, supra note 71 with Financial Federated, supra note (University of Florida Levin College of Law Professor Jeffrey Davis addressed the issue of pre-bankruptcy planning in the advanced bankruptcy class held on April 2, 2004. The students, this author included, spend a large portion of class discussion attempting to distinguish Havoco with Financial Federated).
62 In re Stoltz, 315 F.3d 80,94 (2d Cir. 2002).
63 In re Bogdanovich, 292 F.3d 104, 107 (2d Cir. 2002).
64 In re Hill, 95 B.R. 293, 297 (Bankr. N.D.N.Y 1988).
65 See e.g. Timothy D. Morartzka, Fresh Start, Head Start or Running Start: Bankruptcy Exemption Planning, 2003 ABI J. Lexis 57, (April 2003).
66 Two examples of opposing viewpoints on bankruptcy reform follow. Both sides agree the system must be reformed, but each would target a different area of the current law to change. Vern McKinley and Joseph Pomykala, Bankruptcy Reform: Dead for this Year But Still Badly Needed, CATO INSTITUTE, (Oct. 30, 1998) available at http://cato.org/dailys/10-30-98.html
(last visited Apr. 3, 2004)(Creditors' view: "Congress has improperly viewed bankruptcy as a creditor-funded social welfare program"); Consumer Bankruptcy Attorney Mark J. Markus, Some Thoughts for Those Who Feel Guilty About Contemplating Bankruptcy, available at http://www.bklaw.com
(last visited Apr. 7, 2004.)("There are many factors to consider before filing for bankruptcy but one of them should not be a guilty conscience").
67 H.R. Rep. No. 595, 95th Cong., 2d Sess. 361 (1977); S. Rep. No. 989, 95th Cong., 2d Sess. 76 (1978).
68 11 U.S.C. § 548 (2002).
69 Lawrence Pondroff and Stephen K. Knippenberg, Debtors Who Convert Their Assets on the Eve of Bankruptcy, 70 N.Y.U. L. REV. 235, May 1995.
70 See e.g. Timothy D. Morartzka, Fresh Start, Head Start or Running Start: Bankruptcy Exemption Planning, 2003 ABI J. Lexis 57, (April 2003).
71 Havoco of America, Ltd., v. Hill, 26 FLA. L. WKLY. S416 (Fla. 2001).
72 FLA. STAT. § 726.105 (2004).
73 FLA. STAT. §§222.29 and 222.30 (2004).
74 Havoco, supra note 71 at 1.
75 Stephen C. Hunt & Charles M. Tatelbaum, The Castle Defense: Florida Homesteads and the Havoco Rule, 119 BANKING L.J. 238 (2002).
86 Id. at 2.
87 Id. at 2.
89 Justice Bell wrote the opinion and Chief Justice Wells, and Justices Harding, Pariente, Lewis and Quince concurred. Justice Anstead dissented without comment.
91 In re Financial Federated Title and Trust, Inc., 2003 WL 2271621, 1 (11th Cir. Fla. 2003).
92 In re Financial Federated Title and Trust, Inc., 2003 WL 2271621, 1 (11th Cir. Fla. 2003).
93 Id. at 1, note 1. The Court said the solicitation was "an elaborate Ponzi scheme to defraud". The funds were solicited from investors for the purported purpose of purchasing investments known as viatical investments. A viatical settlement is an investment through which a terminally ill person sells his life insurance policy and when he dies, the investor collects the death benefits. The amount an investor pays for a viatical settlement is based on medical predictions of how long the ill person will survive and other factors. The return on a viatical investment is extremely risky
94 Id. at 3.
100 Id. at 4.
102 The instant case was filled nefarious characters. The debtor's attorney held money to purchase the Delray Beach home in his firm trust account and closed on the property. He later pled guilty to conspiracy to commit mail fraud and was awaiting sentencing at the time of this opinion.
103 Jones v. Carpenter, 90 Fla. 407, 106 So. 127 (Fla. 1925).
104 Palm Beach Savings & Loan Association, F.S.A. v. Fishbein, 619 So.2d 267 (Fla. 1993).
107 Hunt & Tatelbaum, supra note 75 at 238.
108 See e.g. Orange Brevard Plumbing & Heating Co. v. La Crois, 137 So.2d 201 (Fla. 1962), Suntrust Bank/Miami, N.A. v. Papadopolous, 740 So.2d 594 (Fla. 3d DCA 1999).
109 In re Binko, 258 B. R. 515 (Bankr. S.D. Fla. 2001).
115 Englander v. Mills, 95 F.3d 1028, 1030 (11th DCA 1996).
116 Id. at 1028-1029.
117 Id. at 1030.
118 Id. at 1030 quoting In re Englander, 156 B.R. 862, 864 (Bankr. M.D. Fla. 1992).
119 In re Baxt, 188 B.R. 322 (Bankr. S.D. Fla. 1995).
120 In re Mead, 225 B.R. 80,82 (Bankr. S.D. Fla. 2000).
121 Id. at 6.
123 Condominium homes have long been eligible for homestead exemption in Florida. See e.g. In re Dean, 177 B.R. 727 (Bankr. S.D. Fla. 1995); In re Wilbur, 217 B.R. 314 (Bankr. M.D. Fla. 1998); Blecker v. Simms (In re Blecker), 9 B.R. 31 (Bankr. S.D. Fla. 1980).
124 See e.g. Miami Country Day School v. Bakst, 641 So.2d 467 (3d DCA 1994)(holding a house boat was a dwelling house within Florida Statute §222.05, and the debtor's houseboat qualified as homestead property); but see In re Walter, 230 B.R. 200 (Bankr. S.D. Fla. 1999) (denying homestead protection for a 48' boat because it was designed to serve as a recreational vehicle rather than a permanent dwelling); In re Major, 166 B.R. 457 (Bankr. M.D. Fla. 1994)(denying homestead protection for a 34' boat because it was not designed to serve as a permanent dwelling and it was immobile only because its owners lacked sufficient funds to repair the engine); In re Brissont, 250 B.R. 413 (Bankr. M.D. Fla. 2000)(denying homestead protection to a 37' cabin cruiser because it was designed exclusively for use as marine transportation).
125 Id. at 85.
127 The author has conscientiously chosen to write "he" rather than "she" when referring to the dishonest debtor because of all of the "outrageous" cases studied for this Article; none was a female debtor filing alone.
128 National Bureau of Economic Research, NBER Working Paper Series, Working Paper 9010,(2002) at www.nber.org/papers/w9010
(last visited March 30, 2004).
129 Id. at 23.
131 Id. at 27.
132 Id. at 32.
133 Id. at 23.
134 Id. at 17.
135 Jules S. Cohen, The Use of the Florida Homestead to Defraud Creditors, 72 FLA. B.J. 35 (Dec. 1998).
136 Linda Rawls, Sullivan House Exemplar in Attack on Homestead, PALM BEACH POST, Feb. 15, 2003, at Business, 1F.
138 Linda Rawls, Sullivan House Exemplar in Attack on Homestead, PALM BEACH POST, Feb. 15, 2003, at F-1.
140 Jennifer Wells, Lifestyles of the Rich and Rotten, Toronto Star, Business, D1, (Sept. 26, 2002).
141 Eliot Kleinberg, Reynolds Gets Out From Under Bankruptcy, THE PALM BEACH POST (Oct. 8, 1998).
142 Jennifer Wells, Lifestyles of the Rich and Rotten, TORONTO STAR, Sept. 26, 2002 at D-1.
143 But this Article would not be complete without at least mentioning a few other notable bankrupts that used Florida's unlimited homestead exemption to avoid creditors. Jennifer Wells, Lifestyles of the Rich and Rotten, TORONTO STAR, Sept. 26, 2002 at D-1. Corporate raider and convicted felon Paul Bilzerian used Florida's unlimited homestead exemption to avoid his creditors. He retains his $5 million 36,000 square foot Tampa home complete with indoor basketball court and a nine foot Strauss crystal chandelier. Bilzerian completely avoided the $200 million in debt owed his creditors; David J. Morrow, Key to a Cozier Bankruptcy: Location, Location, Location, N.Y. TIMES, Jan. 7, 1998, at A-1. Dr. Carlos Garcia-Rivera, a Miami physician with no malpractice insurance who was named in four separate malpractice, filed for bankrupty protection, and kept a $500,000 home with a 100 foot swimming pool; Larry Rohter, Rich Debtors Finding Shelter Under a Populist Florida Law, N.Y. Times, July 25, 1993, at A-1. Martin A. Siegel is a former Wall Street investment banker convicted of insider trading. While facing a $2.75 billion civil suit, he bought a $3.25 million 7,000 square foot beachfront home in Ponte Vedra Beach.
146 National Association of Consumer Bankruptcy Attorneys, Legislation Page, at http://www.nacba.com/homestead.html,
last visited Apr. 6, 2004. In an open letter to Senator Patrick Leahy (D-Vt.) and Congressman James Sensenbrenner R-Wi.), a diverse group of NACBA members who teach bankruptcy and commercial law, urged lawmakers to close the "luxury loophole" that wealthy debtors now enjoy. They note that they are not all in agreement about what a homestead cap should be, but that a "hard cap" is needed. Those signing the open letter include the University of Florida's bankruptcy professor, Jeffrey Davis. The list also includes the esteemed Professors Lynn LoPucki of the Univesity of California at Los Angeles, Elizabeth Warren of Harvard Law School, Jay Lawrence Westbrook of the University of Texas, and Dean and Professor Nancy Rapoport of the University of Texas.
See also Commercial Law League available at http://www.clla.org
(last visited Apr. 7, 2004).
150 Kohl Letter Urges Colleagues to Keep Homestead Cap, 2002 ABI J. LEXIS 70 (May 2002).
151 Presidential Hopefuls Take Differing Views on Bankruptcy Reform, AM. BANKR. INST. J., (Oct. 2003).
153 See generally 11 U.S.C. §522 (2002).
154 Available at http://www.abiworld.org
(last visited Apr. 7, 2004).