Florida Supreme Court Rules Homestead Cannot Be Waived

Palm Beach County Bar Association Bulletin, March 2008

The Florida Supreme Court recently ruled, consistent with its longstanding precedent, that a waiver of the homestead exemption in an unsecured agreement is unenforceable. DeMayo v. Chames, — So.2d –, 2007 WL 4440212 (Fla.). In the DeMayo case, Mr. DeMayo executed a retainer agreement with his lawyers. The retainer agreement included the following language: “The client hereby knowingly, voluntarily and intelligently waives his right to assert his homestead exemption in the event a charging lien is obtained to secure the balance of attorney’s fees and costs.” The retainer agreement was not a mortgage nor did Mr. DeMayo execute and deliver a separate mortgage and promissory note.

Mr. DeMayo failed to pay his attorney’s fees and subsequently a final judgment was entered in the law firm’s favor. The trial court expressly enforced the waiver provisions of the retainer agreement and the case was appealed to the Third District Court of Appeals. In a plurality opinion, the Third District Court of Appeals reversed the trial court and found the voluntary waiver of a homestead exemption unenforceable. DeMayo v. Chames, 934 So.2d 548 (Fla. 3rd DCA 2006). In a concurring opinion, the concurring judges certified a question of great public importance, which the Florida Supreme Court rephrased to the following: “Should this Court recede from longstanding precedent holding that the Florida Constitution’s exemption from forced sale of a homestead cannot be waived?” The Florida Supreme Court answered the certified question “no.”

The Florida homestead exemption is contained in article X, section 4(a)(1) of the Florida Constitution 1. While the exemption can be waived in a mortgage, the Florida Supreme Court has previously held that it cannot be waived in an unsecured agreement. See, Carter’s Adm’rs v. Carter, 20 Fla. 558 (1884); Sherbill v. Miller Mfg. Co., 89 So.2d 28, 31 (Fla.1956).

In support of its decision, the Court explained the reason behind the homestead exemption as follows: “The public policy furthered by a homestead exemption is to ‘promote the stability and welfare of the state by securing to the householder a home, so that the homeowner and his or her heirs may live beyond the reach of financial misfortune and the demands of creditors who have given credit under such law.’ Id. at 2, citing McKean v. Warburton, 919 So.2d 341, 344 (Fla.2005).

In Demayo, the unsecured creditor asked the Florida Supreme Court to recede from its precedent based on the following three, alleged, subsequent developments: (1) the 1984 amendment to article X, section 4 of the Florida Constitution, which substituted “a natural person” for “the head of family,” changed the purpose of the homestead exemption from one protecting the family home into a personal right that may be waived; (2) a purported national trend approving such waivers; and (3) the Florida Supreme Court’s recent holdings that other constitutional rights can be waived.

The Florida Supreme Court disagreed with the first argument and found that when the voters expanded the homestead exemption from protecting families to protecting all individuals, the voters did not also intended to approve a waiver of the homestead exemption. In response to the second argument, the Court found that Florida remained in line with a majority of jurisdictions and discerned no trend towards approving waivers of homestead. Finally, in response to the third argument, the Court found that permitting a waiver of the homestead exemption in a mortgage, but not in an unsecured agreement, is consistent with their cases allowing waivers of constitutional rights, but requiring them to be knowing, intelligent, and voluntary. Accordingly, the Court declined to recede from their prior decisions and the long-standing precedent that a voluntary waiver of a homestead exemption is not enforceable remains the law. Keep in mind that the outcome of this case would have been different if Mr. DeMayo executed a separate promissory note and mortgage in favor of the law firm.

1. Homestead; exemptions‑‑ (a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty . . . Art. X, § 4(a), Fla. Const. (2004).