Super Priority Code Enforcement Liens Are Unconstitutional – New Supreme Court case

A number of counties and municipalities within the state of Florida have enacted ordinances which give their code enforcement liens a super priority status, co-equal with state tax and special assessment liens.

In the recent case of City of Palm Bay v. Wells Fargo Bank, 57 So.3d 226 (Fla. 5th DCA 2011), the issue of whether a municipality can create an ordinance that makes their municipal code superior to all other liens was finally decided. The Florida Supreme Court, on May 16th, 2013, ruled that a municipal ordinance may not establish super-priority status for its municipal code enforcement liens and therefore the municipality’s lien can not trump a prior recorded lien.

While municipalities have broad powers to create ordinances for its protection, their local ordinances can not establish priority over other existing liens when the ordinance is in conflict with state law. Florida Statute 695.01 provides that no lien on real property shall be valid against subsequent purchasers for value and without notice unless the lien is first recorded. Because the Wells Fargo lien was recorded first it had priority. To allow a municipal lien to have a super priority status would destroy the priority rights that were established by state law. In other words, the law now disallows the creation of super priority status for code liens by counties and municipalities and therefore when a municipal ordinance flies in the face of state law, that ordinance cannot be upheld.

Bottom line – for now, is that municipalities may no longer create ordinances that affect the priority status of liens if the lien’s super priority status conflicts with a state statute. This means that a Super priority provision in a code enforcement ordinance is invalid and a thing of the past and investors, lenders and purchasers should, in theory no longer have to worry about municipal liens taking super priority over their earlier recorded mortgages. How title underwriters will address this new law, especially if the municipality still tries to enforce their super priority status, will most likely be determined over the next few months. So stay tuned……

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