When a court enters a judgment, many assume only the debtor’s direct assets are at risk. But under Florida law, those who receive property from judgment debtors—even unwittingly—can find themselves on the hook. Recipients of such property should be aware of the tools available to judgment creditors and the legal risks they face. This article outlines the key strategies used in Florida to pursue judgment collection through third-party transferees of a debtor’s assets. If you have questions about judgment execution and asset protection, please contact Bernhard Law Firm at www.bernhardlawfirm.com, 786-871-3349, abernhard@bernhardlawfirm.com.

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Proceedings Supplementary – Fla. Stat. § 56.29

Under Florida Statutes § 56.29, judgment creditors may initiate proceedings supplementary to discover and recover assets from both the judgment debtor and any transferees. This includes broad discovery rights and a variety of writs (e.g., execution, attachment, garnishment) to seize assets.

If a debtor has made any gift, transfer, assignment, or conveyance of property with the intent to hinder, delay, or defraud creditors, the court may void the transfer and direct the Sheriff to seize the property. In addition, the court may divert wages and distributions to satisfy the outstanding judgment.

Reach-Back Period: Creditors may target property the debtor held title to or paid for within 1 year prior to the service of process in the original case. Fla. Stat. § 56.29(3)(a).

Exemptions Under Chapter 222 and the Florida Constitution

Certain property remains protected from execution:

• Homestead property is protected under Florida Constitution Article X, § 4 and Fla. Stat. Chapter 222.
• Exemptions include:
  • Primary residence (homestead)
  • $1,000 in personal property
  • Life insurance policies, 401(k)s, pensions
  • 529 education savings accounts
  • Hurricane savings accounts
  • Head-of-household wages
  • Medical savings accounts

A bona fide claimant may assert an interest in the property by filing a bond and affidavit. Fla. Stat. § 56.16.

Tenancy by the Entireties & Homestead Doctrine

Assets held by spouses as tenants by the entireties may be exempt from execution—In re Luna, 100 B.R. 605 (Bankr. S.D. Fla. 1989)—provided the spouses have lived together continuously since acquiring the property.

To qualify for the homestead exemption, a debtor must:

• Objectively use and occupy the home as their primary residence.
• Subjectively intend to live there permanently.
  (In re De Bauer, 628 B.R. 355 (Bankr. M.D. Fla. 2021))

The burden of proof is on the creditor to show the homestead exemption does not apply.
(Wechsler v. Carrington, 214 F. Supp. 2d 1348 (S.D. Fla. 2002)).

Florida courts liberally construe the homestead exemption in favor of the debtor.
(In re Martinez, 595 B.R. 912 (Bankr. S.D. Fla. 2019)).

Equitable Lien on Homestead

If funds that were fraudulently transferred can be traced into a Florida homestead—for purchase or improvement—the court may impose an equitable lien.
(In re Mazon, 387 B.R. 641 (M.D. Fla. 2008))

Failure of both spouses to join in a conveyance can invalidate a tenancy by the entirety and homestead exemption.
(Robbins v. Robbins, 411 So. 2d 1024 (Fla. 2d DCA 1982))

Intent to move into a property after a judgment is insufficient to establish homestead exemption if the debtor doesn’t physically relocate prior to judgment recording.
(In re Harle, 422 B.R. 310 (Bankr. M.D. Fla. 2010))

FUFTA – Florida’s Uniform Fraudulent Transfer Act (Fla. Stat. Chapter 726)

FUFTA (Fla. Stat. §§ 726.101–726.112) allows creditors to set aside transfers of assets intended to avoid judgment enforcement—even if there was no fraudulent intent by the recipient.

A creditor may challenge a transfer where:

• The debtor did not receive reasonably equivalent value, and
• The debtor intended to hinder, delay, or defraud a creditor.

(Fla. Stat. § 726.105)

Creditor Remedies Under FUFTA

• Void the transfer
• Obtain a writ of execution or attachment
• Injunctive relief to prevent further transfer
• Appointment of a receiver

(Fla. Stat. § 726.108)

Transferee Defenses – Fla. Stat. §§ 726.109, 726.110

To protect against claw-back, transferees must be prepared to demonstrate:

1. Reasonably equivalent value was paid.
2. The transaction was part of a legitimate business purpose.
3. The transferee was not an insider or affiliate.
4. The transfer occurred outside the statutory limitations period (4 years, or 1 year after the creditor discovered the transfer).

Even good faith transferees may recover part of their losses.
(Fla. Stat. § 726.109)

A mere unperformed promise or a loan with no repayment demand for two years can be presumed fraudulent.
(Fla. Stat. § 726.104; Fla. Stat. § 726.201)

Definitions

• Affiliate: Anyone with direct/indirect control or ownership, including those operating the debtor’s former business.
• Insider: Family members, business partners, officers, or those in control of debtor’s assets.
• Relative: Includes spouses, blood relatives (up to third degree), and adopted relatives.
• Asset: Any real or personal property, distributions, cash, LLC interests, marital property, or rights to payment.

Charging Orders and LLC Interests – Fla. Stat. §§ 605.0503 & 620.1703

Creditors may obtain a charging order against a judgment debtor’s interest in an LLC or partnership.
(Fla. Stat. §§ 605.0503; 620.1703)

A charging order:

• Places a lien on the debtor’s distributions
• Forces the LLC to redirect payments to the creditor
• For single-member LLCs, the court may order a foreclosure sale of the debtor’s entire interest

Transferees of LLC interests are not shielded from these remedies if the interest came from a debtor.

Equitable Remedies: Beyond the Statute

Equitable Lien

Courts may impose an equitable lien on otherwise exempt property—especially homestead—if fraud or unjust enrichment is proven.
(Zureikat v. Shaibani, 944 So. 2d 1019, 1023–24 (Fla. 5th DCA 2006); In re Neil, 665 B.R. 859, 863–64 (Bankr. S.D. Fla. 2024))

Constructive Trust

When a debtor improperly transfers property into a confidential relationship, courts may impose a constructive trust to prevent unjust enrichment.
(Hutson v. Brooks, 646 So. 2d 276 (Fla. 2d DCA 1994); Abreu v. Amaro, 534 So. 2d 771 (Fla. 3d DCA 1988))

Piercing the Corporate Veil / Alter Ego Doctrine

A creditor may disregard the corporate entity to reach assets held by or transferred through a company that exists only as the debtor’s alter ego.

Requirements:

• Improper conduct or fraudulent intent
• Lack of independent operation or separate identity

(Dania Jai-Alai Palace, Inc. v. Sykes, 450 So. 2d 1114, 1121 (Fla. 1984); Houri v. Boaziz, 196 So. 3d 383, 390 (Fla. 3d DCA 2016))

Transferees and business owners should ensure:

• Corporate formalities are followed
• Separate, well-capitalized bank accounts exist
• Tax returns and reports are filed
• Governing documents are maintained
• A clear line exists between personal and business activity

Conclusion: Transferees Beware

Florida law offers judgment creditors a broad arsenal of tools to pursue assets—not just from the judgment debtor, but from any recipient of their property. Whether by statute (like FUFTA and proceedings supplementary) or equity (constructive trust, equitable lien, veil piercing), assets received from a debtor can become subject to collection.

If you’ve received assets from someone facing financial or legal trouble—or plan to—seek legal guidance to avoid costly exposure. Ignorance of a debtor’s circumstances is not always a defense, and a good-faith transferee can still end up footing the bill.

If you have questions about judgment execution and asset protection, please contact Bernhard Law Firm at www.bernhardlawfirm.com, 786-871-3349, abernhard@bernhardlawfirm.com.