Florida Homestead During Construction

A property under construction in Florida is not protected by the homestead exemption. The constitutional protection from forced sale requires actual occupancy of the property as a permanent residence, and a building site where no livable structure exists does not satisfy that requirement. This gap between acquisition and occupancy creates a window of vulnerability that can have lasting consequences for anyone building a custom home, and the risk is particularly acute for clients who face pending or existing creditor claims. Understanding precisely when protection attaches, what can go wrong during the construction period, and how to manage the exposure is an essential part of any asset protection plan that involves the purchase or development of Florida real estate.

The Vacant Lot Rule

The principle that a vacant lot cannot qualify as homestead has deep roots in Florida case law. The Florida Supreme Court established in Drucker v. Rothstein (1882) that a parcel of land never occupied as a dwelling place is not a homestead under the Florida Constitution, even if the owner has placed building materials on the lot and contracted with a builder. A debtor cannot occupy land without a structure thereon. More than a century later, federal courts applying Florida law reached the same result. In Wechsler v. Carrington (S.D. Fla. 2002), a debtor who purchased a condominium and began moving belongings into the unit was denied homestead protection because he had not physically resided in the property before a judgment was recorded.

The rule extends to homes that are partially built but not yet habitable. A home under construction that lacks a certificate of occupancy, or that has not reached a state where the owner can physically live in the structure, does not qualify. The Florida Bar Journal’s analysis of the case law confirms that no Florida court has granted homestead status to a debtor prior to actual occupancy on the property, regardless of how clearly the debtor’s intent to occupy has been demonstrated through preparatory acts.

The Judgment Lien Trap

The practical danger of the vacant lot rule lies in the interaction between construction timing and judgment lien recording. Under Florida law, a recorded judgment creates a floating lien that attaches to any non-homestead real property the debtor owns in the county where the judgment is recorded. A vacant lot or a lot with an unfinished home is non-homestead property. If a creditor records a judgment in the county where the debtor’s construction project is located before the debtor occupies the finished home, the judgment lien attaches to the property at the moment of recording.

The critical point is that subsequent occupancy does not erase a pre-existing judgment lien. Once the lien attaches to the property during the construction phase, the debtor cannot retroactively defeat it by moving into the completed home. The property becomes a homestead burdened by an encumbrance that predates the homestead status. This means the creditor may be able to enforce the lien against the property even though the debtor now lives there. The occupancy and residency rules require that protection be established before a judgment is recorded, not after.

This sequence creates particular risk for clients who sell an existing homestead and use the proceeds to purchase land and build a replacement home. The sale proceeds may be temporarily protected under the reinvestment doctrine if the debtor demonstrates intent to acquire a new homestead within a reasonable time, but the new property itself is unprotected during the entire construction period. A creditor who has been waiting for exactly this opportunity can record a judgment during the gap and attach a lien to the building lot before the owner ever sets foot in the finished house.

Reconstruction of an Existing Homestead

The analysis changes significantly when the owner is rebuilding or renovating an existing homestead rather than constructing on a vacant lot for the first time. Florida courts have recognized that a homeowner who temporarily moves out of the homestead with the intent to return does not forfeit the exemption through temporary absence. This principle applies to reconstruction scenarios: a debtor who demolishes an existing homestead structure and rebuilds on the same lot should retain homestead protection throughout the construction period, provided the debtor intends to return to the property as a permanent residence once the new structure is complete.

The distinction between new construction and reconstruction rests on whether homestead status was previously established. A debtor who has never occupied the property has no homestead to preserve. A debtor who lived on the property for years, established it as a permanent residence, and then temporarily vacated for renovation or rebuilding has an existing homestead status that survives the temporary absence. The intent to return is the controlling factor. Courts evaluate whether the debtor’s departure was involuntary or temporary in nature, whether the debtor has taken steps inconsistent with returning (such as listing the property for sale or renting it to a long-term tenant), and whether the debtor has established a new permanent residence elsewhere.

This distinction has practical significance for clients who own older homes on valuable homestead land. A debtor who tears down and rebuilds is in a stronger position than a debtor who sells the old homestead, buys a vacant lot, and constructs a new home from scratch. In the first scenario, the homestead status arguably continues uninterrupted. In the second, the debtor passes through a period of exposure during which the new lot is unprotected.

Construction-Period Strategies

Florida law and case law suggest several approaches for managing the vulnerability during new construction.

The LLC construction strategy involves holding the building lot in a limited liability company during the construction phase. Because the property is titled in the LLC rather than in the debtor’s individual name, a judgment recorded against the debtor personally does not automatically attach as a lien to the LLC-owned property. Once construction is complete and the home is ready for occupancy, the LLC transfers the property to the debtor, who simultaneously takes up residence. The transfer from the LLC to the debtor occurs at the same moment the debtor establishes homestead occupancy, closing the gap between ownership and protection. This strategy requires careful execution: the debtor should physically move into the home on or before the date of the deed transfer, and the transfer itself should not be characterized as fraudulent because the lot was not the debtor’s asset to begin with.

The on-site occupancy strategy draws on the Semple v. Semple principle that homestead character will attach where the owner manifests an immediate intention to occupy the premises as a home through specific acts. A debtor who places a mobile home, a recreational vehicle, or even a tent on the building lot and physically lives there during construction may establish homestead occupancy on the land before the permanent structure is completed. Courts have recognized that living in a temporary structure on the lot while the permanent home is being built can satisfy the occupancy requirement, provided the debtor is genuinely residing on the property and not merely staging a brief appearance.

However, the on-site occupancy strategy has limits. The Baldwin v. Alachua County Property Appraiser decision rejected a claim of homestead status where the property owners pitched a tent on their lot for two nights during construction. For creditor protection purposes the analysis may be somewhat more favorable to the debtor than for tax exemption purposes, but a court is unlikely to credit a token overnight stay as genuine occupancy. The debtor must actually live on the property in some form of habitable shelter with the evident intent to remain.

Mechanics Liens During Construction

A separate risk during the construction period is the mechanics lien. Article X, Section 4 of the Florida Constitution expressly excludes from homestead protection any obligation “contracted for the purchase, improvement or repair” of the property. Contractors, subcontractors, and material suppliers who perform work or supply materials for the construction of a home may record a mechanics lien under Chapter 713 of the Florida Statutes, and this lien is enforceable against the property regardless of its homestead status.

This means that even after the debtor completes construction and establishes homestead occupancy, unpaid construction debts can result in a lien and eventual forced sale of the homestead. The mechanics lien exception is one of the few creditor claims that can penetrate the homestead shield. Clients who are building a custom home should ensure that all contractors and subcontractors are paid in full and that proper lien releases are obtained at each stage of construction. Florida’s construction lien law imposes strict notice and timing requirements on lien claimants, and a failure to comply with these requirements can invalidate the lien.

Practical Planning Timeline

For clients building a new Florida homestead, the construction period should be planned as a deliberate sequence of steps, each designed to close one of the gaps that creditors can exploit.

Before purchasing the building lot, the debtor should determine whether any judgments have already been recorded in the county where the lot is located. A title search will reveal any existing judgment liens that would attach to the property at the moment of acquisition.

If judgments exist or litigation is pending, the debtor should consider acquiring the lot through an LLC rather than in the debtor’s individual name. This prevents the judgment from attaching automatically to the building lot during construction.

The debtor should arrange to occupy the property as early in the construction process as possible, whether by living in a temporary structure on the lot or by timing the construction to minimize the gap between completion and occupancy.

When the home is ready, the debtor should coordinate the transfer from the LLC to individual ownership with the physical move into the completed home, so that homestead status attaches simultaneously with the acquisition of title.

Finally, the debtor should ensure that all construction lien obligations are satisfied before or at the time of occupancy. Mechanics liens are the one category of creditor claim that homestead cannot defeat, and unresolved construction debts will follow the property regardless of its exempt status.