Stone v. Stone, — So.3d —-, 2014 WL 5834826 (Fla. 4th DCA November 12, 2014)

4th DCA: Joint deed = valid homestead waiver under F.S. 732.702

Under Florida law a surviving spouse’s testamentary rights in the couple’s marital homestead residence are spelled out in Art. X, § 4(c) of the Florida Constitution and F.S. 732.4015(1). Spouses are free to contractually waive their homestead rights, and often do for estate planning purposes. The statutory requirements governing these waivers are found in F.S. 732.702.

Is “waive” a “talismanic” word within F.S. 732.702?

For the second time in less than 5 years, a Florida appellate court has issued a potentially game-changing homestead decision involving the application of F.S. 732.702 to joint deeds. The first was issued in 2011 by the 3d DCA in Habeeb v. Linder (which I wrote about here). We now have a follow-up opinion from the 4th DCA. If these rulings are broadly applied, post-nuptial waivers of homestead rights should be assumed in virtually all spousal transfers via any kind of “joint” deed (i.e., a deed signed by both the husband and the wife).

At issue in Habeeb and again in this case is whether a joint deed must at the very least include the word “waiver” somewhere within the four corners of the document to qualify as a valid waiver under F.S. 732.702. According to the 3d DCA’s originally-published opinion in Habeeb the answer is NO:

The statute itself contemplates that a “written contract, agreement, or waiver” may be used to memorialize a relinquishment of a spouse’s homestead rights. These alternatives demonstrate that “waive” is not a talismanic word within the statute, so that a contract or agreement may accomplish the same result.

Case Study:

In this case a husband and wife (Jerome and Alma) executed a joint warranty deed in March 2000 splitting title to their homestead residence into two one-half tenancy in common interests and then subsequently transferred their respective one-half interests to two separate qualified personal residence trusts (“QPRTs”), each having a 5-year term. QPRTs are commonly-used estate planning vehicles. The homestead issues in this case turn on whether the joint deed was a valid waiver under F.S. 732.702.

Jerome and Alma had two children, Ross and Nancy. Jerome died in February 2005, just shy of his QPRT’s fifth year anniversary date. This meant Jerome’s half of the homestead property reverted back to his estate. Jerome devised his entire estate, including his half of the homestead property, to Alma in trust. When Alma died in 2009, these assets all went to Nancy — Ross was cut out. Ross tried to undo his disinheritance (at least in part) by arguing that his father’s devise of his half of the homestead property didn’t comply with the homestead-devise restrictions found in Art. X, § 4(c) of the Florida Constitution and F.S. 732.4015. If Ross was right, under F.S. 732.401(1) he’d be entitled to one-half of his father’s retained interest in the homestead property. If Ross was wrong, Nancy keeps it all. Nancy argued Ross was wrong because their mother had validly waived her testamentary homestead rights under F.S. 732.702 when she executed the joint deed.

4th DCA: Joint deed = valid homestead waiver under F.S. 732.702:

The joint deed Alma signed with her husband didn’t say a word about waiving anyone’s homestead rights, but it did include the kind of antiquated catchall conveyance phrases lawyers have been using in deeds for centuries, confirming transfer of all tenements, hereditaments, and appurtenances in any way pertaining to the couple’s homestead property. In Habeeb the 3d DCA concluded that this kind of boilerplate text — even in the absence of any reference whatsoever to any kind of “waiver” — satisfied the statutory requirements governing homestead waivers found in F.S. 732.702 (see here). A single appellate court’s statutory interpretation can be written off as a fluke. Not so when it’s confirmed by another district court of appeal, which is what happened here when the 4th DCA basically came to the same conclusion:

The trial court . . . found that Alma waived her homestead rights for the purpose of the homestead devise restrictions and, therefore, the disposition of the residence was not in violation of the devise restrictions. We agree.

Alma waived her homestead rights by executing the March 27, 2000 warranty deed splitting the property into two one-half tenancy in common interests and then transferring her interest into her QPRT. Section 732.702, Florida Statutes, provides in part, that “[t]he rights of a surviving spouse to … homestead … may be waived, wholly or partly, before or after marriage, by a written contract, agreement, or waiver, signed by the waiving party in the presence of two subscribing witnesses.” § 732.702(1), Fla. Stat. (2011). Further, “[u]nless the waiver provides to the contrary, a waiver of ‘all rights,’ or equivalent language” may constitute a waiver of all homestead rights that would otherwise pass to the waiving spouse by intestate succession. Id. The deed Alma executed on March 27, 2000, provided that she “grants, bargains, sells, aliens, remises, releases, conveys, and confirms” the property “together with all the tenements, hereditaments, and appurtenances thereto belonging or in anywise appertaining.” We agree with the trial court that this constituted a waiver of any constitutional homestead rights Alma had in Jerome’s one-half interest in the property.

Do we need a legislative fix?

Rohan Kelley, one of Florida’s foremost experts on homestead law, was on the losing side of Habeeb. Based on the 3d DCA’s opinion one of Mr. Kelley’s arguments opposing the type of deed-waiver we saw in Habeeb (and see again in this case) is that it amounts to an unintended “gotcha” waiver:

The appellant’s parade of horrible hypotheticals following such transactions (which he characterizes as “gotcha waivers”) is . . . unavailing.

One way to address the gotcha-waiver problem is to legislatively amend F.S. 732.702, statutorily requiring that any waiver by deed of homestead rights have some reference to homestead or at least require the use of the term “waive” or “waiver.” Apparently there’s some talk in Bar circles of doing just that. Prominent Boca Raton probate attorney Charles (Chuck) Rubin wrote about the 4th DCA’s opinion in the Stone case here, in which he provides the following thoughts on whether the gotcha-waiver problem requires a legislative fix:

“From a policy standpoint, there has already been some discussion among Florida attorneys about whether a statutory amendment is advisable to require that any waiver by deed of homestead rights have some requisite reference to homestead or at least require the use of the term “waive” or “waiver.” Having personally seen on more than one occasion such joint deeds sought to be applied against the homestead rights of a surviving spouse when the spouse did not realize that signing on the deed constituted a waiver, I would be in favor of it . . .”

Stay tuned for more.