Opinion ID: 2542857
Heading Depth: 3
Heading Rank: 2

Heading: Receiving the Benefits

Text: Having established that the benefits cited in section 222.25(4) refer only to the protection of the homestead from the reach of creditors provided by the article X homestead exemption, we now determine what it means to claim or receive those benefits within the meaning of the personal property exemption statute. As acknowledged by the courts in both Magelitz and Bennett, under Florida law a debtor need not claim the article X exemption to obtain its protectionsthe provision is self-executing. Further, the benefits of the constitutional exemption ordinarily cannot be waived or lost absent abandonment or alienation of the homestead property. However, as one court has stated, [B]ankruptcy adds another dimension to the analysis. In re Abbott, 408 B.R. at 909. In bankruptcy, a debtor's property becomes property of the bankruptcy estate. See 11 U.S.C. § 541. A debtor, however, may exempt from property of the estate the property permitted under Florida and federal law. 11 U.S.C. § 522. Thus, the debtor in bankruptcy has the option of claiming the homestead as exempt from the bankruptcy estate. In re Bennett, 395 B.R. at 790; accord In re Abbott, 408 B.R. at 910. If a debtor claims the homestead exemption, then he or she receives the benefitsthe homestead's protection from creditors. Alternatively, the debtor may choose not to exempt the homestead from the bankruptcy estate. When the debtor in bankruptcy does not claim the homestead exemption, the debtor effectively surrenders the homestead to the trustee for administration. In re Bennett, 395 B.R. at 790-91. Thus, the additional step of actual abandonment of the real property or an expression of intent to abandon the homestead is not required to bring the debtor within the category of those debtors who do not claim or receive the benefits of [the article X] homestead exemption. As the Bennett court correctly concluded, when the real property which has been occupied by a debtor as his homestead becomes subject to administration by the bankruptcy trustee, the debtor has lost the benefits of the homestead exemption. In some cases, a bankruptcy trustee may decide not to administer the homestead property but to leave the home in the debtor's possession because, for example, there is little or no equity in the home. This decision by the trustee, however, does not negate the debtor's loss of the benefits of the homestead exemption. Whatever benefits may flow to the debtor as a consequence of the trustee's decision, those benefits are not benefits of a homestead exemption. Because the debtor did nothing to prevent the administration by the trustee of the real property which constituted the debtor's home, the homestead exemption has ceased to have any legal effect with respect to that property, and the debtor has lost the benefits of the homestead exemption. Id. at 790; see In re Abbott, 408 B.R. at 910 (By not claiming the homestead exemption in bankruptcy, the debtor ceases to receive the benefit of protecting the home from the claims of creditors and takes the chance that the trustee may administer the property.). Contra In re Brown, 406 B.R. 568, 571 (Bankr.M.D.Fla.2009) (Unless the facts in a particular case indicate morethat the trustee is likely to administer and sell the home, or that foreclosure or surrender of the home to the mortgagee is likelythe mere act of exposing an over-encumbered home to the trustee is a temporary and meaningless event.). Some courts examining the claim or receive the benefits language of the personal property exemption statute have focused on the limiting nature of these verbs. As the court in Gatto observed, the word `receive' is in the present tense. In re Gatto, 380 B.R. at 91. The court found this consistent with the general proposition that a debtor's entitlement to an exemption is determined as of the date of the [bankruptcy] petition. Id.; see In re Morales, 381 B.R. at 920 (A striking feature of the language of the statute is that it is written in the present tense. Therefore, the fact that a debtor may have claimed or received the benefits of a homestead exemption in the past would appear to have no bearing on the application of the statute to a debtor's present situation.). We agree that use of the present tense of the verbs in section 222.25(4) narrows the relevant time that a debtor receives the benefits of the article X homestead exemption to the period when the debtor asserts the personal property exemption. The personal property exemption is unavailable to a debtor asserting that exemption who is contemporaneously claiming or receiving the benefit of the homestead exemption. Accordingly, whether a debtor in bankruptcy could claim the homestead exemption, previously received the benefits of the homestead exemption, or may receive such protection after discharge from bankruptcy does not constitute receiving the benefits of the article X homestead exemption within the meaning of the personal property exemption. See In re Bennett, 395 B.R. at 788 (There would be no reason for the legislature to have allowed the exemption for a debtor who `does not claim or receive the benefits of' if it truly meant merely that a debtor `could claim' or `is eligible to claim' the Homestead Exemption.); see also In re Abbott, 408 B.R. at 910 (Therefore, whether a debtor acquires equity in the property in the future is irrelevant to the issue of whether the debtor receives the benefits of the homestead exemption as of the petition date.); In re Hernandez, 21 Fla. L. Weekly Fed. at B300 (In allowing or disallowing a debtor's attempt to claim the Statutory Personal Property Exemption in a bankruptcy case, the focus is solely on the exemptions which will affect creditors in the case. The fact that the debtor is keeping his home and may use the constitutional shield to protect against execution by future creditors is not relevant.).