News for Broward Taxpayers
Winter-Spring 2010

Avoid Common Title Problems By Better Understanding the Different Types of Ownership on Deeds

We often hear from taxpayers -- all well-intentioned -- who lost or seriously compromised their valuable exemptions or Save Our Homes (SOH) protection when they made “do-it-yourself” changes to a deed. While we always recommend you seek professional advice from a qualified attorney when making title changes, the information below should help you better understand the key differences between the most common forms of home ownership if you still decide to risk making these changes on your own. Keep in mind these are VERY simplified explanations of some rather complicated legal issues. There are many variations (and legal and tax consequences) of ownership types, but this list should give you a basic understanding of these important concepts:

TENANTS IN COMMON (TIC): Each of the owners owns a share of the property, which may be sold separately. Florida law presumes equal ownership interests, unless specific percentages are written in the recorded deed. See Section 689.15, Florida Statutes. Example: “To Bill Johnson and Mary Smith” would give Bill and Mary ownership of 50% each. IMPORTANT: Unless a different type of ownership (see below) is specified in the deed, Florida law ALWAYS defaults the co-ownership to TIC. Under TIC, if only one of two owners files for homestead, the property would get 100% of the $25,000 homestead exemption -- but only 50% (the amount owned by the one who filed) of the assessed value is protected by the SOH cap.

TENANTS BY THE ENTIRETY (TBTE): This applies only to a husband and wife, who should be identified in the deed as “husband and wife” or “a married couple.” This TBTE status -- which is automatic when that language is stated -- gives each spouse overlapping 100% interests, full exemption coverage (when one files), and rights of survivorship. This interest automatically converts to TIC status when the divorce is finalized (unless or until the property is transferred to one spouse pursuant to the divorce settlement or court order). Also, if co-owners marry after previously purchasing a property as single persons, please let us know about the marriage (i.e., copy of marriage certificate) so we can update our records.

JOINT TENANTS WITH RIGHT OF SURVIVORSHIP (JTRS): This gives two or more unmarried co-owners legal rights to property largely similar to those granted to TBTE owners. Example: “To Mark Wright and Bill Johnson, as joint tenants with right of survivorship.” The JTRS co-owners would each own overlapping 100% interests -- and any one owner filing for homestead would qualify for 100% of the homestead and SOH coverage. When a JTRS co-owner dies, all remaining title interests are automatically divided between the living JTRS co-owner(s). We strongly urge all JTRS owners living on the property to file for homestead.

LIFE ESTATE (LE): This is the present interest to use a property for life, but leaves the remainder interest (i.e., title after the life estate holder dies) to one or more future owners. Example: “To Mary Smith for her life, with the remainder to her sons Bill Johnson and Steve Johnson.” Mary (the life estate holder) is the only person eligible for homestead during her lifetime. It is also possible to create joint life estates allowing more than one person to have full rights to use the property at the same time (example: an elderly couple retain joint life estates before leaving the remainder to their child). IMPORTANT: There are different ways to create life estates -- some allow for more flexibility than others as to a future sale of the propery -- so discuss this with an attorney to learn more.

REMAINDER: This is the future interest that follows a life estate. Example: “To Mary Smith for her life, with the remainder to Bill Johnson.” Under Florida law, Bill does not have any present right to possess the property until Mary dies. So long as Mary (the life estate holder) is alive, Bill (the remainder interest) is not eligible to claim homestead on the property. This is true as a matter of Florida law even if Bill is living on the property with Mary’s permission during her lifetime.

TRUSTS: Deeding ownership of a homesteaded propert into a trust (revocable, irrevocable, land trust, etc.) is another common way for maintaining homestead on a property while avoiding probate and taking maximum advantage of federal tax laws. However, as these are rather complex to establish correctly -- in that the trust must be formally created before the property ownership is deeded to the trust -- speak with your attorney and/or accountant instead of attempting to do this on your own.

PARTNERSHIPS, LLCs and CORPORATIONS: You will LOSE your homestead exemption (or be unable to qualify for homestead) if your property is deeded to a partnership, LLC or other corporation (including a Subchapter-S corporation). This is true even if you are the sole partner or shareholder in the entity. Florida courts have ruled that these entities are simply not eligible to qualify for homestead. See: Prewitt Management Corp. v. Nikolits, 795 So.2d 1001 (Florida 4th District Court of Appeals, 2001).

IMPORTANT: Deeds related to Broward County properties must be recorded with the Broward County Records Division in downtown Fort Lauderdale. Click here to visit their website.

Contaminated Chinese Drywall Problems

As has been extensively reported in the news, some homes constructed in Broward within the past few years contain contaminated Chinese drywall. This drywall -- over time -- emits sulfur odors and seemingly causes visible corrosion to copper pipes and air conditioner evaporator coils. However, until a homeowner contacts our office to notify us, we have no way of independently identifying which homes contain contaminated Chinese drywall. We understand these drywall problems seriously impact the value of homes. To ensure fair assessments for these damaged properties, we will reduce the building value by 50% -- subject to the owners providing us with sufficient documentation of the condition. To request this reduction for 2010, please contact our Residential Department Manager Bob Zbikowski or at 954.357.5880 to notify us if your home has documented Chinese drywall issues. Note: You do NOT need to notify us again of this condition for the 2010 assessment if you previously provided this documentation to our office last year.

Special Saturday Hours for 2010

To better serve Broward working families, our offices will be open from 8:30 am - 5 pm on the following five Saturdays during 2010: February 27, May 8, June 12, August 28, and September 11.

The Duties of the Property Appraiser

We know there is quite a bit of confusion about what our office does versus other governmental entities, based upon the emails and calls we receive daily. Hopefully, this 60-second guide will help point you in the right direction:

WHAT WE DO: By law, we monitor all recorded property sales and reassess all property in Broward County every year using mass-appraisal methods (regardless of whether there was a recent sale). We process all applications for property tax exemptions (homestead, disability, seniors, non-profit, etc.) and classifications (agricultural) and maintain the integrity of these valuable savings by investigating all allegations of fraud and abuse. We maintain the official “tax roll” -- which is a written, computerized inventory filed with the Florida Department of Revenue in Tallahassee identifying and valuing all real property and commercial personal property in Broward. We prepare and mail the TRIM Notices every August informing taxpayers of their proposed assessments and tax rates. We engage in extensive public outreach to keep people informed of changes in law impacting property owners. We defend our values in cases heard by the independent Value Adjustment Board and in circuit court.

WHAT WE DON’T DO: We don’t set your tax rates (contact your City Commission, School Board, etc.). We don’t send the tax bills nor do we collect the taxes (contact the County Revenue Collector). We don’t record deeds, liens or mortgages (contact the County Recording Division). We don’t conduct individual appraisals of specific properties (contact a private appraiser). We don’t investigate forged deed signatures or mortgage fraud schemes (contact the police).

Report Homestead Fraud

If you believe you have reliable information about someone engaging in fraud relating to exemptions or special property classifications, please call our Fraud Investigation Section at 954.357.6900 and we’ll check it out. Our office's investigators have already successfully added more than $1 billion in assessed value to Broward's tax roll because of your helpful tips!