BAPCPA and TBE, Existing Together in Florida

Palm Beach County Bar Association Bulletin, May 2007

Two Florida bankruptcy courts recently issued opinions regarding the application of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) to Florida’s tenancy by the entirety exemption law. In each case the court held BAPCPA did not limit Florida’s tenancy by the entirety exemption.

In the case of In re Buonopane, 2007 WL 247888 (Bankr. M.D. Fla.) the issue before the court was whether homestead property which is also claimed as tenancy by the entirety exempt is subject to the $125,000 cap for homestead property acquired within 1215 days of the bankruptcy filing. 11 U.S.C. § 522(p) In concluding tenancy by the entirety property is not subject to the $125,000 cap, the court refers to the legislative history of BAPCPA which explains that the reasoning for enacting the $125,000 cap is to close the “mansion loophole.” The court then found that there is nothing in the legislative history which in any way indicates the BAPCPA limitations were directed to Florida’s common law on tenancy by the entirety property.

In the case of In re Schwarz, 2007 WL 247649 (Bankr. S.D. Fla.) the issue before the Court was whether a debtor can claim a tenancy by the entirety exemption for his Florida residence even though he was not domiciled in Florida during the 730 days preceding the bankruptcy filing as required by 11 U.S.C. § 522(b)(3)(A). The Court held that even though the debtor was not domiciled in Florida during the 730 day period immediately proceeding the petition date and thus was not eligible to claim a Florida homestead exemption in the property, as long as the debtor owned the property in tenancy by the entireties with his non-debtor wife and held his entireties interest immediately prior to the commencement of the case, the real property was exempt from administration as property of the estate. The Court found that the tenancy by the entirety exemption provision applies by its clear and unambiguous terms not merely to homestead property or to property that is the debtor’s domicile, but to all property owned by the debtor as tenancy by the entireties, if such property is exempt from process under state law.