New Decision: Cooperative Homestead Status (Walters v. Agency for Health Care)

Michael Gelfand 12/24/2019

The third time may be the charm to provide guidance as to whether an interest in a cooperative apartment is homestead protected from the stated creditor claims. The Third District Court of Appeals certified conflict in Walters v. Agency for Health Care Administration, Case No. 3D18-1505 (Fla. 3d DCA, December 4, 2019).

The Background.

Walters, the decedent’s daughter and sole heir, petitioned to declare the decedent’s cooperative corporation/association stock as homestead property and to have that property distributed to her free of Estate creditor claims. The Agency for Health Care Administration (“AHCA”) claimed an $81,276.76 debt from the Estate and objected to homestead protection.

The trial court denied the heir’s homestead petition relying upon In re Wartles’ Estate, 357 So.2d 708 and Phillips v. Hirshon, 958 So.2d 425 (Fla. 3d DCA 2007), that a cooperative apartment “owner” is not really an owner of an interest in real estate, but is the owner of a share of stock.

The Opinion.

Placing the situation in context, the appellate court outlined the Florida Constitution’s three different types of homestead protection: taxation; from sale by creditors; and, alienation or devise/descent. The manner of classification of the homestead right was critical, Walters asserting a homestead exemption from a forced sale. The AHCA asserting that Walters’ claim involved the alienation and descent provision. The distinction is critical because of the Florida Supreme Court’s precedent in Wartles followed by the Third District in Phillips that held that a cooperative interest, based on ownership of stock or membership in a corporation, provided a homestead exemption for taxation, but not for any other purpose.

The protection from alienation and devise relies upon there being a fee simple interest in land to which the appellate court cited to Art. X, § 4 Fla. Const.; § 732.401, Fla. Stat. (2017). Acknowledging that post Wartles the Florida Legislature revised the Cooperative Act to avoid the distinction created by stock ownership, the Third District felt bound to follow the precedent in Phillips v. Hirshon because Phillips certified the issue to the Florida Supreme Court. The Florida Supreme Court discharged the certified question, not providing guidance.

Thus, the appellate court held that the issue here is not a forced sale, but of the ability to devise and for descent; thus, the court is bound by the precedent of Wartles and Phillips v. Hirshon, in spite of conflicts with Geraci v. Sunstar EMS, 93 So.3d 384 (Fla. 2d DCA 2012).

The appellate court certified the following as a question of great public importance:

DOES THE FLORIDA SUPREME COURT’S DECISION IN RE ESTATE OF WARTELS V. WARTELS, 357 So.2d 708 (Fla. 1978), HAVE CONTINUING VITALITY IN LIGHT OF THE ADOPTION BY THE FLORIDA LEGISLATURE OF THE COOPERATIVE ACT, CHAPTER 76-222, LAWS OF FLORIDA?

The appellate court noted that the question was the same as certified in Phillips v Hirshon.

Kibitzing.

This decision highlights for the practitioner the need to differentiate the different types of Florida Constitutional homestead protection. The three are confused on a regular basis.

Focusing on ownership rights, the court contrasts the interest created in a cooperative situation which is different from a condominium. Unlike a condominium where a grantee normally receives a real property interest, in a cooperative an “owner” is not an owner, but is a corporate member frequently receiving a share of stock which is normally considered tangible and personal property; thus, not normally be entitled to constitutional homestead protection regarding devise and descent.

HB 623 revives an effort from last year to amend §719.103(25) to define an “An interest in a [cooperative] unit is an interest in real property. That would seeming solve the issue. With a new companion bill, SB 1154, this Bill may become law!

Stepping back, consider the juxtaposition of the Third District’s view of precedent with the recent view of the Florida and United States Supreme Courts. The Third District heeding closely to precedent even with the strong public policy arguments of protecting one’s home, raised by the seemingly inescapable conclusion that Wartles was overruled by change in the law.

Many thanks to Shawn Brown for immediately providing the decision.

Best for the Holiday season!

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2019 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

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