One of my clients owns a small 1/4 lot within a municipality. There are two separate residential buildings on this small lot. The client and his family live in one building. The client leases the second building to tenant who is not a family member. The client asks me if the entire property is exempt homestead.
The issue is whether the debtor’s lease and collection of income from the second building converts part of the property to a business property rather than a residential homestead. There have been several cases over many years which have addressed this issue. I understand that under the current law, as interpreted by the Florida Supreme Court, makes a distinction between leasing part of a homestead located inside a city and leasing part of a homestead in the county.
A debtor residing within a municipality forfeits at least part of homestead protection if he leases his land or improvements for income, whereas leasing has no effect on homestead protection of residences up to 160 acres located outside a municipality. The Supreme Court found that the Florida Constitution expresses different scope of homestead protection depending upon the residences location. Specifically, homestead within a municipality is limited in the Constitution to the residence of the owner and the owner’s family; property occupied by non-family members loses homestead protection.