A HELOC on a Florida Home Held in a Living Trust

The spouse signs, even if the spouse is not on the trust

Florida's constitution lets the owner of homestead real estate mortgage it only when "joined by the spouse if married." Title companies apply that to the trustee of a living trust holding a married settlor's homestead the same way they apply it to a deed in one spouse's name: the spouse who did not create the trust, is not a trustee and is not borrowing still signs the mortgage. It is a signature on the security instrument, not on the line agreement, and it does not put the spouse's credit into the file. A common surprise for second marriages, where each spouse keeps a separate trust.

Homestead exemption and Save Our Homes stay put

Putting the house in a revocable trust did not cost you the homestead exemption: Florida extends it to a resident who holds beneficial title in equity, which is what the living beneficiary of a revocable trust holds. A line of credit does not change that, because a mortgage is a lien, not a transfer of the home. The Save Our Homes cap on how fast the assessed value can rise only resets on a change of ownership, and the statute carves out transfers between legal and equitable title where the same person remains entitled to the exemption. Some property appraisers ask to see the trust or a certification when a deed into a trust is recorded; that is about the exemption, not the loan.

What the lender can ask to see

Florida's certification statute, §736.1017, lets a trustee hand a lender a certification instead of the trust instrument, and limits what the lender may demand under that section to excerpts that name the trustee and grant the power to act. A lender that relies on the certification in good faith is protected. That is why a Florida title insurer will usually insure a trust-vested line from a certification and a handful of pages.

Land trusts are a different animal

Florida land trusts — where a title company or attorney is trustee and the family holds the beneficial interest, often for privacy — are not living trusts, and many home equity programs list them as ineligible. If your deed names a third-party trustee "under a land trust agreement," read the trust-types page before applying anywhere.

Condos, insurance and the rest of the Florida file

The trust is rarely the hardest part of a Florida file. A condominium building's reserves and inspections, a wind or flood policy that names the trustee correctly, and a property-tax bill that matches the trust's name on the deed all come up more often. Have the declarations page show the trust (or the trustee) as a named insured before you apply, and the title search and insurance will agree with each other the first time. Florida condos with building issues are covered on FloridaNonWarrantable.com.

Korbin is in Florida

Korbin lives in Boca Raton and works the Florida market every day, so the homestead joinder, the trust certification and the insurance naming are handled at the start rather than discovered at the closing table.

Questions trust owners ask about this