Transferring house to daughter could cause problems
Dear Mr. Feichthaler,
I purchased a house in Cape Coral last year which was seller financed. I have been paying the landlord monthly as agreed, and have had no problems. Unfortunately, a business loan which I personally guaranteed has led to a judgment against me. So, I was wondering whether I should transfer the house to my daughter (who has a different last name) so the judgment will not attach to my house. Good idea?
– Jim M.
Dear Jim,
Your question leads to several issues. First, consider whether the property is your homestead. If it is, the personal judgment against you may not attach to the house. Homestead protection in Florida is among the strongest of all states. Losing homestead status could also lead to property tax consequences as well.
You mentioned that you have seller financing. Almost every note will have an “Acceleration clause,” which provides that the full amount of the loan is due and payable if the property is transferred to anyone, either by gift or sale. If you transferred to your daughter without the consent of the previous owner/lender, you could have a big amount due, and a potential foreclosure on your hands.
If the property is not your homestead, and you transfer the house to your daughter to avoid the judgment, a court could consider this a “fraudulent transfer.” If a court finds assets are transferred to avoid creditors, a court could unwind the transaction, making the asset attachable by your judgment. Anytime one is considering alienating homestead, professional counsel should be sought.
Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.