Code Liens Are Not Superpriority Liens: Is it the End of the Debate?

The Florida Supreme Court recently ruled that a local ordinance in Palm Bay giving priority to code enforcement liens over earlier recorded mortgages is invalid. This means that code enforcement liens do not have priority over mortgages. The court found that the ordinance conflicts with state law. This ruling ends the uncertainty surrounding the case and has important implications for the mortgage market in Florida. Code enforcement liens are like fines that are imposed on property owners for not following the local rules and regulations. These fines are meant to make sure that property owners keep their properties in line with the rules. If the fines are not paid, they can become a legal claim on the property. The goal is to encourage property owners to follow the rules and keep their properties in good shape. The F.S. Ch. 162 was created to allow local governments to impose fines for code violations. This is in line with the Florida Constitution, which says that fines can only be imposed as provided by law. The law allows local governments to set up code enforcement boards to handle these matters. Before imposing fines that can become liens on property, the law requires that the property owner is given notice and a chance to explain their side of the story. The Second District Court of Appeal said that the City of Tampa can’t enforce code ordinances using methods other than those in the state law. The Florida Supreme Court also said that when a city’s ordinance conflicts with state law, the ordinance can’t be upheld. The process for enforcing code violations and placing liens on property follows state laws. The court recently decided that Palm Bay city cannot create superpriority code liens. This means that code liens don’t have priority over things like mortgages. The city’s ordinance that tried to give code liens superpriority was not allowed. The ordinance said that the code liens should be treated as very important and receive special treatment. It also said that the liens could be foreclosed upon. But the court said this was not allowed by Florida law. Ordinance 97-07 tried to make code liens more important than other liens, but it went against state law. The law says that local rules can’t go against state rules. The goal of the law is to make sure that code fines become a lien on property when they’re recorded. In the City of Palm Bay case, the Supreme Court said that letting cities make their own superpriority rules would go against what the state decided. The Fifth District Court of Appeal in City of Palm Bay found that local ordinances conflict with state law regarding the priority of liens. The Supreme Court emphasized that the priority of recordation is important in determining lien priority. There is no exception for a code enforcement lien, and attempting to give it superpriority over a prior recorded mortgage impairs the lender’s rights. Foreclosures can have a negative impact on communities, leading to vacant properties, increased criminal activity, and neighborhood blight. This puts a strain on local governments and lenders. Local governments have made rules for banks to register vacant properties to prevent them from causing problems in the neighborhood. Banks now have departments that make sure these properties are taken care of and follow the rules. In Florida, it’s been decided that code enforcement fines are not more important than other debts when a property is foreclosed. Local governments and banks should work together to make sure empty properties don’t cause problems for the community. If code enforcement fines were given more importance, it would have made things difficult for the real estate market in Florida. In a case called Sarasota County v. Andrews, the court found that the county couldn’t make a code enforcement lien superior to a prior recorded mortgage. This violated the rights of the mortgage lender. The law says that code enforcement boards can only handle certain types of violations.

In another case, City of Palm Bay v. Wells Fargo Bank, the court agreed that code enforcement boards have specific rules they have to follow.

Overall, the law says that code enforcement boards can only handle certain violations, and they have to follow specific rules when they do. This is a legal case between the City of Palm Bay and Wells Fargo Bank. The city is arguing about the priority of interests in real estate under Florida law. The priority of interests is generally determined by three statutes. Florida is a notice jurisdiction, which means that the legal significance of priority of recordation comes into play in this case. There are some exceptions made by the legislature for certain types of liens, such as property taxes and utility liens. Ultimately, the case is about which party has the first right to the property in question. Annabella Barboza is a real estate lawyer in Ft. Lauderdale who specializes in real estate transactions, title insurance, foreclosure, and corporate law. She is a member of the Real Property, Probate and Trust Law Section of The Florida Bar and serves as treasurer of the Broward County Hispanic Bar Association.

Source: https://www.floridabar.org/the-florida-bar-journal/code-liens-are-not-superpriority-liens-is-it-the-end-of-the-debate/