Associations Can Help Tackle Homestead Fraud - But Should They?
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Florida has distinct and separate laws regarding “homestead” or a “homestead exemption”.
One set of laws are the laws that protect homestead property from forced sale and from having a judgment or other liability result in a lien against the property. This exemption is governed by Article 10, Section 4, of the Constitution of the State of Florida, which exempts a homestead from forced sale and provides that no judgment or execution shall be a lien thereon.
Another set of laws regarding homestead are the laws which reduce the taxable value of residential real property by up to $25,000 for qualified residents. Pursuant to Section 196.031, Florida Statutes, everyone who qualifies for the initial homestead tax exemption is also entitled to an additional exemption of up to $25,000 on the assessed valuation greater than $50,000 for all levies other than school district levies.
In 1992 Florida voters approved the "Save Our Homes" Amendment to the Florida Constitution. If a homestead property qualifies for "Save Our Homes" protection, the yearly assessed value will not increase by more than 3 percent of the prior year's assessment (or the percentage change in the Consumer Price Index, whichever is less). While there are exceptions to the increases in valuation for new construction or improvements to the property, this protection results in thousands of dollars in savings for many Florida homeowners.
In order to qualify for the homestead tax exemption and "Save Our Homes" protection, there must be an actual intent to live permanently in a place, coupled with actual use and occupancy. Ultimately, all that is required to claim a homestead is that the person intends to reside on the property and in good faith makes the same his permanent home. The property appraiser makes a factual determination whether the property qualifies as the applicant's "permanent residence" for homestead purposes.
Improper, or fraudulent, homestead filings cost counties millions of dollars. Lori Parrish, the Broward County Property Appraiser, created a Fraud Unit, staffed with a combination of career law enforcement officers and knowledgeable appraisers in 2005 when she first took office. According to the Broward County Property Appraiser's website, as of mid-2008, the Fraud Unit investigated nearly 15,000 cases, which resulted in over $19 million in back tax liens and penalties. It also added more than $3 billion dollars worth of property into the tax roll due to fraudulent and unlawful exemptions. Investigators discovered many fraudulent exemptions as a result of reports from associations indicating which properties (units or homes) were leased or rented. The Lee County Property Appraiser, Ken Wilkinson, supports a requirement for community associations to supply information regarding leased or rented units to the local property appraiser's office.
How do you feel? Should community leaders and managers have an obligation to rat out owners leasing their properties (while claiming homestead)?
I don't understand. HOA attorneys put liens and do foreclosures all the time on homestead property, don't they???
Article 10, Section 4, seems to offer protections. What are the protections from a homestead being sold on the courthouse steps for HOA assessments?
I absolutely agree that a list of all condo units that
are rented, leased or sit empty more than six months
out of the year should be reported to the County Assessor or Tax Collector in each county. In Hillsborough it is easy
to access the name and mailing address of any owner of a property if you enter their address. You can scroll down and see IF the property has been homesteaded. If each County has a site as user friendly and effective as Hillsborough, a volunteer can look up 10 addresses a day easily and make a list of those who are breaking the rules. This also applies to Homeowner Associations who have lists of homes where the owner doesn't live on the property. The County does need the money!!!
It is difficult, and in some cases nearly impossible, to actually and accurately determine the validity of an owner's intentions to reside in a condo unit. Even mailing addresses cannot be depended on because an owner can reside in the unit and get his/her mail delivered to a different address, even an out of town address. A state law requiring Associations to track and report resident status is an open invitation to errors and possible legal liability if an Association's report was incorrect and cost an owner their homestead exemption. Plus, it add more work to the Association staff that is non-productive.
'rat out'?
If in the course of investigating whether a unit qualifies
for a homestead exemption, the Property Appraiser asks the
association to verify whether a unit is owner occupied or
leased, isn't there an obligation on the part of the board to provide an answer?
I have enough to do without becoming doing Property Appraisers job. If asked, info should be provided to the best of the Associations knowledge. I do not want to police the issue.
I don't consider it "rat out" as you describe. Homestead is for owner occupied properties, not investment properties, which is what they become when rented out. I think it is the right thing to do. There needs to be closer monitorng on homestead benefits, once you apply it's good for years and years unless the owner notifies the Property Appraiser to discontinue homestead, which is not going to happen.
Rat out?! Why should it be considered ratting out? The law is the law. I approached the mayor and the town commission in my town and let them know the extent of homestead fraud occurring here. They don't want to "scare off" tourist dollars. HUH?! None of these people committing homestead fraud live here for more than 4 to 6 weeks a year tops. Why should the rest of us have to follow the laws and the snowbirds don't have to? Recently, it was discovered that a person on our board for the past 3 years who lives in another state and conducts board meetings by conference call, has homesteaded this Florida property on top of homesteading another one of the 6 other properties he owns in Massachusetts. He has his car registered here to defraud the state of Massachusetts of paying the yearly automobile excise tax, and requests an absentee ballot to vote. This man is NEVER here. How is this allowed to happen. It is extremely unfair to the rest of us who do live here permanently. Someone committing homestead fraud should not be allowed on a condo board in the state of FL but that is happening too.
Rat them out? I'm on a witch hunt now, forget the rats. This week alone I've "ratted" on 6 people and I will continue to do so until people do the right thing.