3d DCA: A co-op is NOT homestead property
Phillips v. Hirshon, --- So.2d ----, 2007 WL 1263475 (Fla. 3d DCA May 02, 2007)
Article X, section 4(c) of the Florida Constitution, which declares that “homestead shall not be subject to devise if the owner is survived by a spouse or minor child,” is one of the few "forced heirship" rules applicable under Florida law (the only other example of significance would be Florida's spousal elective share rules). These rules provide an opportunity to challenge a will that is exponentially easier than traditional grounds for challenging a will in Florida (see here).
Children challenge dad's devise to girlfriend on homestead-law grounds
In this case dad devised a life estate in his Key Biscayne penthouse to his girlfriend. One of his two surviving sons was a minor, so they challenged this devise by arguing that the property was homestead property. Here's how the 3d DCA summarized their argument:
The trial court didn't buy this argument, and neither did the 3d DCA based on a conflicting Florida Supreme Court opinion. However, the 3d DCA made clear that it felt the sons should have prevailed, and took the extra step of certifiying the issue to the Florida Supreme Court for reconsideration. Here's ow the 3d DCA summarized its holding:
Article X, section 4(c) of the Florida Constitution, which declares that “homestead shall not be subject to devise if the owner is survived by a spouse or minor child,” is one of the few "forced heirship" rules applicable under Florida law (the only other example of significance would be Florida's spousal elective share rules). These rules provide an opportunity to challenge a will that is exponentially easier than traditional grounds for challenging a will in Florida (see here).
Children challenge dad's devise to girlfriend on homestead-law grounds
In this case dad devised a life estate in his Key Biscayne penthouse to his girlfriend. One of his two surviving sons was a minor, so they challenged this devise by arguing that the property was homestead property. Here's how the 3d DCA summarized their argument:
After their father's death, Joseph and David filed separate petitions to determine homestead. The thrust of their argument to the trial court was that the co-op was homestead property in the hands of their father at the time of his death and therefore not subject to devise by him under Article X, section 4(c) of the Florida Constitution, which declares that “homestead shall not be subject to devise if the owner is survived by a spouse or minor child.” The brothers contend that because David was a minor, the bequest under the will fails and the property passes outside of the estate, and therefore, the brothers now share the father's interest in the co-op on an equal basis as a matter of law.Court says NO to homestead status for co-op
The trial court didn't buy this argument, and neither did the 3d DCA based on a conflicting Florida Supreme Court opinion. However, the 3d DCA made clear that it felt the sons should have prevailed, and took the extra step of certifiying the issue to the Florida Supreme Court for reconsideration. Here's ow the 3d DCA summarized its holding:
The Levine brothers urge that because their father occupied the co-operative apartment under a long-term proprietary lease received in conjunction with his purchase of his interest in the co-op, the property is protected homestead property under Florida law. Applying the principle of stare decisis, we affirm the decision of the trial court on authority of In re Estate of Wartels v. Wartels, 357 So.2d 708 (Fla.1978), which expressly holds “that a cooperative apartment may not be considered homestead property for the purpose of subjecting it to Florida Statutes regulating the descent of homestead property.” Id. at 711 (construing Article X, section 4(a)(1), Fla. Const.). At the same time, we certify to the Florida Supreme Court as a question of great public importance under Article V, section 3(b)(4) of the Florida Constitution, whether its decision in Wartels has continuing vitality in light of subsequent legislative action. We also find certifiable, direct conflict between our decision today and the decision of the Fourth District Court of Appeal in S. Walls, Inc. v. Stilwell Corp., 810 So.2d 566 (Fla. 5th DCA 2002), which construed the same section of Article X, section 4 of the Florida Constitution upon which the Wartels court relied to deny the benefit of homestead to an heir in the devise and descent context of Article X, section 4(c) to nevertheless afford the benefit of homestead protection from a forced sale under Article X, sections 4(a) and 4(b) of the same constitutional provision.
I recently argued a case which involved the creditor-protection aspects of Article X, Section 4. The case you cited involved the devise and descent aspect of Article X, Section 4.
In my case, the creditor argued that a leasehold cooperative did not qualify as "real property" for purposes of protection from creditor claims in a probate proceeding. The creditor's attorney cited the Wartel decision, which is really a devise and descent case. The creditor's attorney provided a copy of a recent ruling in South Florida where the court applied Wartel to rule in favor of the creditor who objected to a petition to determine homestead. Apparently, there are many counties where the Wartel case is being applied, I believe, in the wrong context. This is a big issue in some areas where cooperative mobile home parks are very popular.
Southern Walls, Inc. v. Stilwell Corporation, 810 So. 2d 566 (Fla. 5th D.C.A. 2002)involved the creditor protection aspect of Article X, Section 4 during the property owner's lifetime. I argued because Article X, Section 4, gave the homeowner proteciton during his lifetime. Article X, Section 4, says that the protection against creditor claims "inures" to the benefit of heirs. Therefore, the Southern Walls case, not Wartel, controlled. Thankfully, our probate judge agreed.
When framing homestead questions, it is critical to distinguish between (1) creditor protection, (2) devise and descent issues, and (3) ad valorem tax exemptions for homestead. They each have separate statutory and case law treatment.
Hopefully, the Supreme Court will get a chance to decide Wartel is wrong. It seems that the creditor protection cases and statutes have expanded the meaning of "real property" that can qualify for homestead pruposes, while devise and descent cases are more limited. The statutes and cases also seem to have expanded the meaning of an interest in real property for purposes homestead tax exemptions. While the courts distinguish the three areas, its hard for me to see the logic in such different treatment for cooperatives.
Jeff,
Excellent post. I've got a cooperative mobile home park issue with a creditor claim against a Decedent.
The Supreme Court dismissed the appeal in Phillips v. Hirshon by PCA opinion and directed that no motion for rehearing will be permitted. I have just filed a brief in the 2nd DCA for a case involving a cooperative unit with a mobile home. My case involves a creditor claim filed in the probate proceeding. We'll see if I have more luck.
Too bad the Supreme Court PCA'd this appeal; the DCAs could use some guidance on this point.