Homestead Proceeds Invested In Marketable Securities May Be An Exempt “Homestead Account.”

The concept of a “homestead account” is well established in Florida. Proceeds from the sale of a Florida homestead property remain exempt for a reasonable time while the homeowner searches for a replacement homestead. The homestead account most often refers to a separate bank account where the owner deposits the sale proceeds. Is protection lost if the owner invests the proceeds in marketable securities.

I came upon a 2015 case that dealt with this issue while doing some legal issue for a client on a related issue. A judgment debtor segregated his proceeds from the sale of his homestead in a stock account where he purchased mutual funds. A creditor garnished the brokerage account..The debtor filed a motion to dissolve the garnishment because the account was a “homestead account” even though it was not a bank account. The issue was whether using the money to buy stocks and bonds changed the nature of the funds from a reserve to replace the homestead to an investment vehicle designed primarily to earn income.

The court held that the segregated brokerage account is consistent with an exempt homestead account. The court pointed out that the debtor’s money was kept separate and was invested in low risk securities. The court said it was not addressing whether income earned in the brokerage account was also exempt from creditors.

Last updated on May 22, 2020

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