SELL OR REFINANCE EVEN IF ENCUMBERED BY A JUDGMENT LIEN BY FILING A NOTICE OF HOMESTEAD

If you cannot refinance or sell your property because of a non-secured judgment lien, there is a way to now do so. Florida Senate Bill 370 has been approved and is now effective as of June 17, 2005. The bill now encompasses the entire Fla. statute chapter 55 relating to judgments and liens, rather than just sec. 55.10 of the statute. This means, in effect, that the entire judgment laws under chapter 55 of the Fla. Statutes are now covered under a Notice of Homestead. 

When a certified copy of a judgment has been filed in the public records against 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, they may file a notice in the public records of the county in which the homestead property is located. This provision of the law may allow you to sell or refinance your home if you have a judgment or a lien against you and may allow it to happen free and clear within 45 days. Be advised you must have a contract to sell or a commitment from a lender for a mortgage on the homestead before you may file the notice to the creditor, which is required for due process.

The clerk must mail a certified copy of the Notice of Homestead to any and all judgment lienors. A lien pursuant to the judgment lien laws of Florida of any lienor upon whom such notice is served, who fails to institute a court action for a declaratory judgment to determine the constitutional homestead status of the property described in the Notice of Homestead or to file an action to foreclose the judgment lien, together with the filing of a lis pendens in the public records of the county in which the homestead is located, within 45 days after service of such notice shall be deemed as not attaching to the property by virtue of its status as homestead property as to the interest of any buyer or lender, or his or her successors or assigns, who takes under the contract of sale or loan commitment described above within 180 days after the filing in the public records of the notice of homestead. 

Generally the provisions of the recent law may be summarized as follows:

a. Applies to a homeowner against whom there is a recorded money judgment for a debt that would not be enforceable against a homestead; (i.e., not for taxes, purchase money or improvement of the property.)

b. The owner must have applied for and received the homestead tax exemption and must have claimed homestead separate and apart from the tax exemption via a "Designation of Homestead". This may mean a new owner may not be able to qualify during the year of purchase. Application for the tax exemption may only be made between January 1 and March 1 of each year, and requires the owner have resided on the premises on January 1^st.

c. If the exemption has been received, and the claim or "Designation of Homestead" has been made, the owner may then file the Notice of Homestead on the form specified in the statute. The Notice asserts the validity of the claim of homestead, identifies the judgment in question, and describes the proposed sale or mortgage then pending.

d. The Notice is filed in the Official Records and the clerk must send a copy of the Notice to the judgment lienor by certified mail. The judgment lienor then has 45 days to file a suit for declaratory judgment contesting the claim of homestead, including a Lis Pendens.

e. If no such action is filed, the judgment is not enforceable against the contract buyer or lender if the sale or mortgage is closed within 180 days of filing the Notice of Homestead.

You can rely upon this procedure to also obtain title insurance without exception for judgments properly treated under the statute provided that the following is determined:

1. The homestead tax exemption has been received by the current owner and a "Designation of Homestead" has been claimed. An exemption to the predecessor of the current owner would not comply, even though it will remain valid for the rest of the year.

2. The judgment against which it is applied was not for taxes, purchase money or improvements (i.e., Contractor's or Mechanic's lien) as set out in the statute and constitution.

3. The title insurance company must run name searches on the current owner and the holder of the judgment to determine if an affidavit of current address has been recorded, and to verify the Notice of Homestead was sent to the latest available address.

4. No action to contest the claim of homestead, or to foreclose the mortgage, is filed within 45 days after service of the notice. 

5. Closing of the proposed sale or mortgage must be within 180 days of the filing of the Notice. All closings in reliance upon this procedure must be in escrow until the title insurer has examined through the recording of the instruments they are to insure. 

We realize that many transactions may be delayed long enough to accomplish this procedure; however, it may not prove to be beneficial to some. Under Florida law, homestead exemption may not be used to shield property from: (1) payment of taxes and assessments thereon; (2) obligations contracted for the purchase, improvement or repair thereof; or (3) obligations contracted for house, field or other labor performed on realty. If you need to refinance or sell and a judgment lien encumbers your property, contact us. We also urge everyone who has a lien against them to record a notice contesting the lien. We can help! 

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