Page 18 - Boca Club News - October '22

Page 18, Boca Club News
Legal:

Vacation Homes

By Michael J Posner, Esq., a partner and their guests and invitees can sue owners for damages agreement regarding the ownership and use of the vacation
in Ward Damon P.L. a mid-sized real if they are injured or have a damage loss on your vacation home. This agreement should provide how costs are to be
estate and business-oriented law firm property. shared, when each party has the right to use the vacation
serving all of Florida, with offices in One way to limit liability is to own a rental vacation home, how death and disability are handled during the
Palm Beach and Lee County. They property in a limited liability company. This form of ownership period, and a mechanism for the sale of the
specialize in real estate law and can ownership will prevent the guests or their invitees suing vacation home. This includes who will be the primary
assist sellers and purchaser with you personally for loss or damage at the vacation home. manager or managers of the vacation property.
closing and financing of residential Only the property owned by the LLC will be exposed should Deciding whether to rent your vacation home is another
and commercial real estate including there be a claim at the vacation home. issue that can lead to legal issues. Not only are you renting
remote closings. They can be reached at (561) 594-1452 or If the vacation home is located outside the State of real estate, you are also renting your personal property that
at mjposner@warddamon.com. Florida, then additional planning should be considered. If will, from my experience, be subject to use and abuse by
Owning a vacation home is a popular activity for you own the property individually and die you will have to your numerous guests if you have a successful vacation
many people. Whether it is a mountain cabin, a waterfront have a probate in Florida and an ancillary administration rental property. Working with a reputable property manager
condominium, a timeshare or just a second home, proper in the state of your vacation home property. can minimize or eliminate many of these concerns, but with
planning and ownership are crucial for a successful Owning your out-of-state vacation home in a revocable a cost that can be as high as forty percent of your rental
ownership experience. trust will prevent the necessity of the out-of-state ancillary income.
If the vacation home is located in Florida, an owner has probate. Instead, the property will stay in the trust upon Also note that if you financed the purchase of the
to consider a few issues. First, how is title vested? Unlike a your death. This trust can be used to not only hold title to vacation home as a “2nd home,” you could be risking a
primary residence that is protected from creditor claims as your vacation home, but also other assets that you own in loan default by later renting out the vacation home. This is
homestead, a second vacation home does not have the same Florida. because rental property is both underwritten and financed
protections. If the vacation home is owned individually, Ownership in a trust is good for probate avoidance but at different rates (usually higher) than 2nd home non-rental
creditors can reach that ownership, including claims by any does not protect you from creditor claims arising from income properties.
tenants or guests, as well as third party claims against you loss or damage at the vacation home. As suggested above, As someone who owned a vacation home for seven
individually. if you intend to rent out your vacation home you may years (and lost thousands of dollars per year), it is highly
Married couples should ensure that title to the vacation want to consider using a limited liability company. This is recommended that careful planning and thought be
home is vested in them as husband and wife (tenants by because a revocable trust will not shield you individually completed before considering this form of investment. It is
the entireties). This will prevent creditors of one spouse from claims of your guests and their invitees at the vacation easy to get enchanted with a vacation area and be misled as
foreclosing a judgment on the vacation home. If the vacation home property. to the amount of rental income you are likely to receive. Had
home is owned jointly by multiple owners, you should also If you intend to purchase a vacation home with other I known then what I know now, I would not have purchased
review the title to determine what will happen when one of nonfamily members, it is important that there be a written my own vacation rental property.
the owners dies. In Florida the default status is tenants-in-
common, which means that if one owner dies the property
will pass through that person’s estate. If this is not your
intent, then you must make sure the deed states that the
ownership is as joint tenants with full rights of survivorship.
If you intend to rent out your vacation home, you must
make sure that your insurance covers rental loss. Failure to
obtain proper coverage could result in a loss of coverage in
a rental claim. In addition, a vacation rental is no different NOVEMBER 11 TH
than being a landlord of an investment property. Your guests

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for Boca Raton

Address The Protecting

AFFORDABILITY WOMEN’S RIGHTS
CRISIS

Focus On Common Sense

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ELECTION DAY  TUESDAY, NOVEMBER 8TH

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Paid by Andy Thomson, Democrat, for State Representative