SUNTRUST BANK/MIAMI, N.A. AND FIRST UNION NATIONAL BANK OF FLORIDA, APPELLANTS,
v.
ATHANASIUS A. PAPADOPOLOUS A/K/A ARTHUR A PAPPAS A/K/A ART PAPADOPOLOUS A/K/A ART PAPPAS AND DEBORAH P. PAPADOPOLOUS, APPELLEES

Fla. 3d DCA | 1999-09-01
No. 99-118
Before COPE, LEVY and GREEN, JJ.
740 So. 2d 594 Florida District Court of Appeal, Third District (1999) Positive Treatment
Cited by 6 cases

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Synopsis

The Florida District Court of Appeal affirmed that judgment liens obtained by banks do not attach to the proceeds of a homestead sale, even when proceeds are used to satisfy a second mortgage obtained for non-homestead purposes. The court held that homestead protection extends to net sale proceeds when reinvested in another homestead.


Holding

Judgment liens do not attach to homestead property or the net proceeds of a homestead sale when the homeowner demonstrates an abiding good faith intention to reinvest those proceeds in another homestead within a reasonable time. The homestead exemption applies to net proceeds regardless of whether a second mortgage was obtained for non-homestead purposes.


Headnotes

[1] Judgment liens do not attach to homestead property.

[2] A sale, gift, or other disposition of property that is absolutely exempt from the payment of the owner's debts cannot be impeached by creditors as a fraud of their rights…

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Key Quotes

“we hold the proceeds of a voluntary sale of a homestead to be exempt from the claims of creditors just as the homestead itself is exempt if, and only if, the vendor shows by a preponderance of the evidence an abiding good faith intention prior to and at the time of the sale of the homestead to reinvest the proceeds thereof in another homestead within a reasonable time. Moreover, only so much of the proceeds of the sale as are intended to be reinvested in another homestead may be exempt under this holding.”

Establishes the standard for homestead exemption of sale proceeds, requiring good faith intent to reinvest in another homestead

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Facts & Procedural History

In 1986, Athanasius Papadopolous purchased a homestead with a purchase money mortgage. In 1989-1990, the banks obtained judgments against him unrelate…

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Opinion of the Court
COPE, J.

COPE, J.

Suntrust Bank, N.A., and First Union National Bank of Florida (collectively “the banks”) appeal the trial court’s declaration that their judgment liens do not attach to the proceeds of the sale of the judgment debtor’s homestead property. We affirm.

In 1986 appellee Athanasius A. Papado-polous acquired a homestead and encumbered it with a purchase money mortgage. In 1989 and 1990 the banks obtained judgments against Athanasius in litigation unrelated to the mortgage. In 1992, Athanasius married appellee Deborah Pa-padopolous and both took title to the property by the entireties. In 1996 Atha-nasius and Deborah jointly obtained a second mortgage on the home and used the proceeds to pay an Internal Revenue Service hen and other personal debts, not including the banks’ judgments.

The homeowners wish to sell the homestead and, after satisfying the first and second mortgages, use the net proceeds to acquire a new homestead. They filed this declaratory judgment action seeking a determination that the property was homestead and that the judgment hens do not attach to the property or sale proceeds. The trial court ruled in favor of the homeowners, with the proviso that the net sale proceeds would have to be held in a segregated account until reinvested in a new homestead. See Orange Brevard Plumbing & Heating Co. v. La Croix, 137 So. 2d 201, 206 (Fla.1962).

The banks argue that the judgment hens should attach to the proceeds of sale to the extent that they are intended to be used to repay the second mortgage. The banks contend that the purposes of the homestead protection would not be served by allowing a homeowner to encumber the property for non-homestead reasons and that to ahow repayment of those encumbrances before prior-recorded hens would allow debtors to circumvent the judgment cohection process. They theorize that because the second mortgage loan was not used to acquire or improve the homestead property, any sale proceeds intended for repayment of that loan should not enjoy the homestead exemption. They rely on Orange Brevard Plumbing & Heating Co. v. La Croix, in which the supreme court stated:

[W]e hold the proceeds of a voluntary sale of a homestead to be exempt from the claims of creditors just as the homestead itself is exempt if, and only if, the vendor shows by a preponderance of the evidence an abiding good faith intention prior to and at the time of the sale of the homestead to reinvest the proceeds thereof in another homestead within a reasonable time. Moreover, only so much of the proceeds of the sale as are intended to be reinvested in another homestead may be exempt under this holding.

137 So. 2d at 206. The banks reason that sale proceeds can be exempt only if (a) used to pay off a mortgage obtained to buy or improve the homestead property, or (b) used to acquire a new homestead.

The banks read Orange Brevard too narrowly. We believe that the Orange Brevard court intended its holding to apply to the net proceeds of any sale of homestead property rather than to the gross proceeds of such a sale.

“[A] sale, gift or other disposition of property which is by law absolutely exempt from the payment of the owner’s debts cannot be impeached by creditors as in fraud of their rights. Creditors have no right to complain of dealings with property which the law does not allow them to apply on their claims, even though such dealings are with a purpose to hinder, delay or defraud them.”

Sneed v. Davis, 135 Fla. 271, 276-77, 184 So. 865, 868 (1938) (citation omitted); see also Rigby v. Middlebrooks, 102 Fla. 148, 150, 135 So. 563, 564 (1931); Nationwide Financial Carp. v. Thompson, 400 So. 2d 559, 561 (Fla. 1st DCA 1981); Volpitta v. Fields, 369 So. 2d 367, 369 (Fla. 4th DCA 1979); Fla. Const, art. X, § 4 (1968). Thus, “[a] mortgage-on homestead property cannot be impeached • by creditors.” Kitchens v. Kitchens, 142 So. 2d 343, 344 (Fla. 2d DCA 1962).

The trial court’s ruling was entirely correct. Judgment liens do not attach to homestead property and there is no way in which a judgment creditor can compel sale of such property to satisfy its claim. It would have been improper to permit the banks to accomplish indirectly that which they cannot do directly. See Hill v. First National Bank of Marianna, 79 Fla. 391, 399, 84 So. 190, 192 (1920).

Affirmed.


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Citator

Cited By

  • McKEAN v. Warburton, 919 So. 2d 341 (Fla. 2005)
    …of acquiring another home within a reasonable period of time. See Orange Brevard Plumbing & Heating Co. v. La Croix, 137 So. 2d 201 (Fla.1962). The proceeds can be used to pay off an existing mortgage. See Suntrust Bank/Miami, N.A., v. Papadopolous, 740 So. 2d 594 (Fla. 3d DCA 1999). . Section 733.805(1), Florida Statutes (2004), provides that funds of the estate shall be used to pay debts, charges, expenses, and devises, and that if the property is insufficient to cover all of those, gifts under the will sh…
  • Saia Motor Freight Line, Inc. v. Reid, 888 So. 2d 102 (Fla. 3d DCA 2004)
    …tative appointed), review denied, 666 So. 2d 143 (Fla.1995). Reid is not permitted to do indirectly that which the law forbids him to do directly. See Bauman v. Healy, 141 Fla. 478, 193 So. 773, 779 (1939); Suntrust Bank/Miami, N.A. v. Papadopolous, 740 So. 2d 594 (Fla. 3d DCA 1999). Therefore, the offer of judgment filed by Reid as a co-personal representative and individual survivor is an invalid, non-binding offer of judgment. [*104] Because the offer was not valid, we reverse the fee award based thereon.…
  • Rossano v. Britesmile, Inc., 919 So. 2d 551 (Fla. 3d DCA 2005)
    …he proceeds of the sale are not exempt if they are not reinvested in another homestead in a reasonable time or if they are held for the general purposes of the vendor. La Croix, 137 So. 2d at 206; see also Suntrust Bank/Miami, N.A. v. Papadopolous, 740 So. 2d 594 (Fla. 3d DCA 1999); Shawzin v. Donald J. Sasser, P.A., 658 So. 2d 1148 (Fla. 4th DCA 1995), review denied, 669 So. 2d 252 (Fla.1996); Sun First Nat’l Bank of Orlando v. Gieger, 402 So. 2d 428 (Fla. 5th DCA 1981). Reversed. . The home sold for a gr…

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