August 1, 2013
by Roger D. Bear
Florida Foreclosure Attorneys, PLLC
USFN Member (Florida)
In May of this year, the Florida Supreme Court issued a decision in the case of City of Palm Bay v. Wells Fargo Bank, 2013 WL 2096257. The issue addressed by the court was the priority between a recorded city code enforcement lien with “superpriority” and a prior recorded mortgage.
Florida’s recording statutes normally give priority to a recorded lien like a mortgage against a later recorded lien such as a city code enforcement lien (however, all such liens are inferior to state, county, district, and municipal taxes). The City of Palm Bay attempted to change this priority by enacting in 1997 a municipal ordinance, which specified that recorded code enforcement liens would have priority coequal with the liens of all state, county, district, and municipal taxes, superior in dignity to all other liens, titles, and claims until paid.
In 2007, Wells Fargo filed an action to foreclose its mortgage, recorded in 2004, on residential property located in the city of Palm Bay. Palm Bay was named a defendant in the foreclosure suit due to two code enforcement liens it recorded after the mortgage. In answering the complaint, Palm Bay asserted its code enforcement liens had priority pursuant to the 1997 municipal ordinance. At the hearing on Wells Fargo’s motion for summary judgment, the trial court rejected Palm Bay’s claims of lien superpriority. The trial court reasoned that the legislature’s failure to bestow code enforcement liens priority over a prior recorded mortgage or judgment lien indicated its intent that these liens not have priority and, thus, the common law principle of first in time, first in right applied.
In reviewing the case, the Florida Supreme Court declared that municipal ordinances are inferior to laws enacted by the Florida Legislature and must not conflict with any controlling provision of a state statute. It was undisputed that the Palm Bay ordinance provision establishes a priority that is inconsistent with the priority established by the pertinent provisions of the Florida Statutes.
The court went on to state: “In those statutory provisions, the Legislature has created a general scheme for priority of rights with respect to interest in real property. Giving effect to the ordinance superpriority provision would allow a municipality to displace the policy judgment reflected in the Legislature’s enactment of the statutory provisions. And it would allow the municipality to destroy rights that the Legislature established by state law. A more direct conflict with a statute is hard to imagine. Nothing in the constitutional or statutory provisions relating to municipal home rule or in the Local Government Code Enforcement Boards Act provides any basis for such a municipal abrogation of a state statute. The conflict between the Palm Bay ordinance and state law is a sufficient ground for concluding that the ordinance superpriority provision is invalid.” Therefore, the court concluded that the city’s lien did not have priority over the previously recorded mortgage lien.
This ruling assures mortgage lenders in Florida that they will have priority over later recorded municipal code enforcement liens.
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