Hugo Enriquez Real Estate

No Full Homestead Exemption for Partial Rentals

What for many landowners who survive on this, is nothing more than an attempt by the state of Florida to follow the destructive policies of other countries.

Rejecting lower-court decisions, the Fla. Supreme Court ruled that homeowners who rent out rooms within their property may lose part of their homestead exemption.

Rejecting lower-court decisions, the Florida Supreme Court on Thursday said a Sarasota man should not have received a homestead property-tax exemption for part of his house that he rented out.

The Supreme Court unanimously sided with Sarasota County Property Appraiser Bill Furst, who in 2014 investigated whether Rod Rebholz should have been receiving a homestead exemption on what was described as a single-family home.

Furst determined that 15% of the property was not entitled to a homestead exemption because it was being rented to a tenant. That resulted in Rebholz facing $7,000 in back taxes, penalties and interest for the tax years 2004 through 2013.

Rebholz, who lived in part of the house and initially applied for a homestead exemption in 1996, challenged the decision, touching off years of legal battling. A circuit judge and a panel of the 2nd District Court of Appeal ruled against the property appraiser, but the Supreme Court on Thursday said the property was not eligible for a full homestead exemption.

“Rebholz and the district court would allow a property’s structure – and the labels used to describe the property – to dictate the application of the homestead tax exemption,” Chief Justice Carlos Muniz wrote in a 19-page opinion. “The result would be to make arbitrary distinctions between functionally similar homeowners and properties, without any constitutional or statutory basis for doing so. In this case, for example, the label ‘single-family residence’ does not reflect the true design and use of Rebholz’s property. That property was effectively a boarding house, a part of which Rebholz lived in and used as his own residence.”

Muniz wrote that Rebholz “lived on the bottom floor, which consisted of a kitchen, living area, and bathroom. The upper floor had a common laundry area and four individual rooms, each with its own living area and bathroom; some of the rooms had a kitchenette. Each room was lockable from the outside. The front door entry to the property had two doorbells, one for the bottom floor and the other for the top.”

Furst’s determination that 15% of the property should not receive a homestead exemption was based on one tenant, John Michael Beaumont, who rented one of the upstairs rooms from 1996 through the tax years in the dispute, according to Thursday’s ruling.

“(Consider) the part of the structure that Rebholz rented to Beaumont throughout the tax years at issue – the 15% that the property appraiser has designated as non-homestead property. Did Rebholz use that property as his residence? Surely not,” Muniz wrote. “The record leaves no doubt that Rebholz gave exclusive use of that portion to Beaumont, subject to Beaumont’s compliance with the terms of their rental agreement.”

The panel of the 2nd District Court of Appeal said in its June 2020 ruling that the house should not be divided up for tax purposes – and pointed to potentially broader implications.

“Based upon our analysis of the Florida Constitution, statutes, and codes, we conclude that the property appraisers of this state are not authorized by law to carve up a homeowner’s permanent residence in order to remove the protection provided by the constitutional homestead exemption when that person rents a bedroom or any other space within their home,” the panel decision said. “Any interpretation to the contrary would circumvent public policy and could create financial hardship for countless Florida citizens who reside within their permanent residences while renting bedrooms or working from home to make ends meet.”

But Muniz on Thursday disputed that the Supreme Court opinion would affect people who work at home.

“The phrase ‘working from home’ speaks to activity occurring within property already found to be the owner’s residence,” the opinion said. “This case is about defining the scope of the residence in the first instance. Here, Rebholz gave a tenant exclusive use of a portion of Rebholz’s property, reserving to himself only the access rights of a landlord. That portion of the property was not Rebholz’s residence.”

A footnote in the opinion said Rebholz died in November 2015 and that the case continued with the trustee of a revocable trust as the plaintiff.

Thanks Florida Realtor

The U.S. consumer watchdog’s report on junk fees focused on a range of businesses, such as banking and payday lending, and includes four used by mortgage servicers.

The Consumer Financial Protection Bureau (CFPB) released a special edition of its Supervisory Highlights report on unlawful junk fees uncovered in deposit accounts and in multiple loan servicing markets, including in mortgage, student and payday lending.

“For years, junk fees have been creeping across the economy,” says CFPB Director Rohit Chopra. “Our report describes a host of illegal junk fee practices that the CFPB has uncovered across the financial services sector.”

A complete writeup of CFPB’s junk fee claims is posted on its website. Those leveled at the mortgage industry include “old and new ways that mortgage servicers attempt to run-up unlawful fees that are charged to homeowners”:

Excessive late fee amounts: Mortgage servicers charged the top late fee amount allowed by relevant state laws, even when homeowners’ mortgage contracts capped late fee amounts below state maximums.
Fees for unnecessary property inspections: Mortgage servicers charged consumers $10 to $50 fees for every property inspection visit to addresses that were known to be incorrect. Servicers continued to pay inspectors to go to the known incorrect addresses and continued to charge consumers for those visits.
Fake Private Mortgage Insurance (PMI) premium charges: Servicers included monthly PMI premiums that homeowners did not owe in their monthly statements.
Failure to waive fees for homeowners entering some loss mitigation options: CARES Act mortgage forbearance covered not only a mortgage’s principal and interest, but also stopped servicers from charging late fees during the period of forbearance. The Department of Housing and Urban Development (HUD) put further protections in place for homeowners that exited forbearance and went into permanent COVID-19 loss mitigation options, including waiving certain fees or other charges that accrued outside of forbearance periods. However, CFPB examiners found that some servicers failed to adhere to HUD’s additional protections, and charged homeowners late charges, fees and penalties that should have been waived.

Thanks FLORIDA REALTORS