Can You Waive Your Constitutionally Protected Homestead Exemption?

Palm Beach County Bar Association Bulletin, February 2006

Until recently, it appeared to be settled Florida law that a debtor’s voluntary waiver of his or her homestead exemption was unenforceable and contrary to public policy. Sherbill v. Miller Manufacturing Company, 89 So.2d 28 (Fla. 1956). However, on November 30, 2005, the Third District Court of Appeal issued an opinion which arguably contradicts Florida Supreme Court precedent by allowing a debtor to waive his or her right to the homestead exemption protections afforded by the Florida Constitution1. Demayo v. Chames, 2005 WL 3180187 (Fla. 3rd DCA 2005). In Demayo, Mr. Demayo executed a retainer agreement with his lawyers which, among other things, stated “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.” Id. Mr. Demoyo 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 holding that a client can waive his constitutional right to an exemption of his homestead property from a charging lien, the court was guided by the following three considerations: (1) the homestead exemption only applies to “forced sales,” which the court determined this was not; (2) a prohibition of a waiver would “conflict with several expressed provisions of the Florida Constitution, which have long been construed to provide all citizens of the state with both the right to contract and the right to own, use and dispose of one’s real property as he or she deems fit”; and (3) Mr. Demayo could have achieved the same result by simply exercising the right to mortgage his or her homestead for the benefit of a creditor. Id. at 3.

In holding as it did, the Demayo Court recognized that it is not their place to overrule a Supreme Court decision, but found that “in this case we consider, based upon the 1984 amendment to Article X, section 4 and the recent pronouncements of our high court, that Sherbill is not a viable guide to interpreting Article X, section 4 as it presently is constituted.” Id. at 5. The specific 1984 amendment which the Court refers to expanded the class of persons who could take advantage of the homestead exemption by substituting “natural person” for “the head of a family.” In a strong dissent, Judge Wells expressly disagreed with the majority’s view that the 1984 amendment substituting the term “natural person” for the term “head of a family” changed the character and the purpose of the homestead exemption to permit exceptions to the exemption other than those expressly provided in Article X, Section 4. Id. at 7. Judge Wells found the Florida Supreme Court decision in Sherbill to be dispositive. Id. at 6.

In Sherbill, the debtors obtained a loan by executing a note that specifically provided that “the makers and endorsers of this note hereby waive the benefit of their homestead exemption as to this debt. . .” Sherbill at 29. When the debtors defaulted, the creditor obtained a judgment and sought to levy on the debtors’ realty, contending that the debtors had waived their homestead exemption. The Florida Supreme Court rejected this argument and refused to enforce the waiver on public policy grounds, observing that no policy of this state is more strongly expressed in the constitution, laws and decisions of this state and the policy of our exemption laws. Id. at 31.

In support of his dissenting opinion, Judge Wells poignantly illustrates what he most fears “about the change the majority has wrought today.” Demayo at 9. Specifically, the fear that “the waiver of the homestead exemption will become an everyday part of contract language for everything from the hiring of counsel to purchasing cellular telephone services.” Id. Judge Wells states that “The average citizen, who is of course charged with reading the contracts he or she signs, as this court knows all too well, often fails to read or understand boiler plate language detailed in consumer purchase contracts, language which the contracts themselves often permit to be modified upon no more than notification in a monthly statement or a bill.” Id.

At the time of publication of this article, counsel for Demayo will surely have filed her notice of appeal to the Florida Supreme Court. Those concerned with preserving the Florida Homestead exemption and protecting those who need the exemption most, should keep a careful watch on this case.

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).

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