Having met the Residency Requirements, Even a “Bad Actor” like this Debtor, may Claim Florida’s Homestead Exemption

Having met the Residency Requirements, Even a “Bad Actor” like this Debtor, may Claim Florida’s Homestead Exemption

Debtor filed two Chapter 11 bankruptcy petitions exactly one year apart—on December 22, 2014 and on December 22, 2015. In both cases, Debtor has listed his Homestead as exempt on his Schedule C. Debtor got a Florida driver’s license on July 1, 2011. Debtor’s minor daughter has attended a Florida school near the Homestead since 2011.  Debtor, acting pro se, credibly and consistently testified that he has lived in the Homestead since 2011, and intends to continue residing in the home.

Creditor’s objection relates to a dispute pending in Massachusetts between the Debtor and the Guardian for his Mother, the Creditor. The Massachusetts State Court has found the Debtor culpable for stealing money rightfully belonging to his Mother and has entered a substantial judgment against the Debtor to recover these losses arising from a proven breach of the Debtor’s fiduciary duties. Much of this defalcation relates to the Debtor’s improper transfers to himself or related entities of real property located in Florida, Massachusetts, and New Hampshire that formerly belonged to his now deceased father. None of these transfers, however, directly relate to the Homestead. Debtor’s father never owned the Homestead. Debtor instead purchased the Homestead on May 23, 2005, five years before this litigation started in Massachusetts. Creditor presented absolutely no evidence directly connecting the Debtors purchase of his Homestead with the on-going litigation in Massachusetts.

Rather, Creditor points to actions and statements made by the Debtor in the Massachusetts litigation to raise questions as to the legitimacy of the Debtor’s right to claim the Homestead exempt. For example, Debtor has received mail at four separate mailing addresses in recent years. Getting mail at more than one address is not determinative of homestead status. Many people who own multiple properties receive mail at several different addresses. And, here, Debtor consistently has gotten mail at his Homestead.

The only plausible piece of evidence supporting Creditor’s objection is that the Debtor filed a homestead declaration exemption in Massachusetts in 2014. The Massachusetts Probate and Family Court found that this Declaration was an improper “encumbrance on real estate.” Earlier, in 2009, the Massachusetts Court had found the deed transferring this Massachusetts property to the Debtor to be null and void because of the Debtor’s defalcation in his fiduciary duties. Debtor’s ethics certainly are suspect, but this Court concludes that the filing of the Homestead Declaration in Massachusetts was a desperate attempt to keep real property about to be lost in the Massachusetts litigation. He likely committed an infraction of Massachusetts law, but the Massachusetts Declaration, even though very troubling, does not negate the fact that the Debtor has physically lived in Florida since 2011 and intends to stay in the state. Even bad actors, like the Debtor, get to claim a home exempt.

Creditor merely argues that the Debtor is not entitled to Florida homestead exemption because the Florida home is not his primary residence. Creditor offers no significant evidence that the Debtor did not use, occupy, or intend to remain in the Homestead.

Alternatively, Creditor argues that, even if this Court finds that the Debtor physically lived in and intended to remain a Florida resident when he filed his bankruptcy petition, Section 522(b)(3)(A) of the Bankruptcy Code requires Massachusetts homestead exemption law to apply, which would limit the value of the exemption to $125,000. Under Section 522(b)(3)(A), a debtor is entitled to claim exemptions in the state “in which the debtor’s domicile has been located for the 730-days immediately preceding the date of the filing of the petition.” If the debtor lived in more than one state during the 730-days preceding his bankruptcy petition, the Court looks at the debtor’s domicile during “the 180 days immediately preceding the 730-day period or for a longer portion of such 180-day period than any other place.

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