August 9, 2017
Buying the ultra-expensive home in Florida has become known to protect unlimited amounts from creditors, even when the residence is purchased after the debtor is aware that a creditor claim exists or is looming.
Out of the chute however, I want to make clear that it is not being suggested here that one engage in this last-ditch effort to avoid paying debts, because this would clearly be a fraudulent transfer scheme that can not only get all involved into hot water, but can end up badly for the debtor if a bankruptcy follows. Nevertheless, folks who have figured out on their own that this can be successfully attempted have found that it was in fact highly effective in the end. This has become evident with a number of published court rulings.
Nevertheless, what prompted this posting was a recent case known as Ramos v. Motamed. Mr. Motamed was involved in a car accident that resulted in a multi-million-dollar judgment against him. He therefore purchased a $1.5 million home in Florida so he could claim it as exempt from any judgement, taking the position that it was his homestead, which is held sacred under the Florida constitution as being untouchable by creditors.
To claim this homestead exemption, one must establish that he is truly domiciled in that State and has his primary (homestead) residence there. In Motamed’s situation, although he came from California, he had obtained a Florida driver’s license, registered to vote in Florida, and even got a library card there. Nevertheless, apparently, he did not occupy his residence there as his primary home.
To claim the Florida homestead exemption, not only does one need to declare the home to be his homestead, but one also needs to look at the truly intended domicile of choice, which can become evident when you look at the broader picture past the driver’s license, voter registration and library card. Where is your dentist, where are your pets (cat, dog, parrot), where are your children’s favorite toys, where do your work out? Motamed, as it turns out, showed up at a gym in California 300 days out of the year in question. This was not a good fact for him. Bottom line, the Court determined the Florida residence was not his homestead, and therefore this left the residence exposed as an available asset to creditor claims.
Cite: Case No. 502015CA012820XXXXMB, Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida—Civil Division (June 20, 2017)