Monday, February 7, 2011

Update: Florida Supreme Court Answers Certified Question re: Homestead Owner's Ability to Claim the Wildcard Personal Property Exemption in Bankruptcy

Earlier today, we published an article composed last week regarding the ability of a bankruptcy debtor who owns a homestead but does not claim a homestead exemption under the Florida Constitution to claim the enhanced personal property exemption set forth in Fla. Stat. § 222.25. In the article, we referenced a pending case in the Florida Supreme Court regarding the meaning of 'receives the benefits' for the purposes of the personal property exemption statute. This morning, we received news that that case has been decided by the Florida Supreme Court. A link to a pdf of the opinion, Osborne v. Dumoulin, --- So.3d ----, 2011 WL 320986 (Fla. 2011), is available here.

The Court decided that, "if under the facts of the case the article X homestead exemption does not otherwise present an obstacle to the bankruptcy trustee's administration of the estate, then the debtor in bankruptcy is not receiving the benefits of the homestead exemption and is eligible to claim the statutory personal property exemption of section 222.25(4)."

This ruling does not appear to be limited by its wording to the specific facts set forth in Dumoulin, where the debtor chose to surrender his homestead in the bankruptcy, but applies more broadly to any bankruptcy case in which the trustee is not prevented by the homestead exemption from administering the property as part of the estate, including the Iuliano case (pdf), discussed in our previous blog post, where the debtor actually stated an intent to keep the property.

The Supreme Court rephrased the question certified by the Eleventh Circuit in In re Dumoulin, 326 Fed. Appx. 498 (11th Cir. 2009) as follows:
"Whether for the purpose of the statutory personal property exemption in section 222.25(4), a debtor in bankruptcy receives the benefits of Florida's article X, section 4, constitutional homestead exemption where the debtor owns homestead property but does not claim the homestead exemption in bankruptcy and the trustee's administration of the property is not otherwise impeded by the existence of the homestead exemption."
The court answered the rephrased question in the negative.

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