Does an unrecorded assessment lien have any validity or value whatsoever? You bet it does! In a very recent Fourth District Court of Appeal case, Calendar v. Stonebridge Gardens Section III Condominium Association, Inc., decided December 13, 2017, the plaintiff homeowner, Mrs. Calendar, appealed a trial court order that dispersed surplus funds from a condominium unit tax sale in favor of the condominium association. The plaintiff homeowner argued that the trial court erred in dispersing the surplus to the condominium association when, in fact, the condominium association had not yet recorded its assessment lien or obtained a final judgment of foreclosure. In other words, she argued the association’s lien was not perfected because it was not recorded. Thankfully, the Fourth District Court of Appeal disagreed with her.
Germaine to the appellate court’s analysis was the “relation back” language set out in section 718.116, Florida Statutes. More specifically, this legislation provides in relevant part, that,
the association has lien that is effective from and shall relate back to the recording of the original declaration of condominium… However, as to first mortgages of record, the lien is effective from and after recording of a claim of lien in the public records of the county in which the condominium parcel is located.
Therefore, except as to a first mortgagee lender, the condominium association has a perfected lien that relates back to the date that the declaration of condominium was initially recorded. However, so as to encourage lenders to loan money in the form of a mortgage to a potential purchaser of a condominium unit, then, in that instance, the association’s lien is only perfected from the date the association’s lien is actually recorded in the public records. In that way, the first mortgagee will have priority over the association’s assessment lien.
In other words, and in plain English, the Fourth District Court of Appeal held that as to everyone but the first mortgagee, the condominium association, by virtue of the recordation of its declaration of condominium, has a lien which is effective from the date the declaration of condominium was initially recorded. This is extremely important in determining what is called “lien priority,” which is necessary to determine how to distribute surplus funds resulting from a tax foreclosure, amongst other things.
In deciding this case, the Fourth District Court of Appeal has made it patently clear that, except as to a first mortgagee, upon the recordation of a declaration of condominium, a condominium association has a perfected statutory lien that relates back to the date of the recording of the declaration of condominium and, therefore, a recorded claim of lien is not required to be in line for the surplus that relates to a tax sale of a condominium unit.
The really good news here is that in July 2007, the Florida legislature mirrored this statutory provision into Chapter 720, the Homeowners’ Association Act, and thus, it was made applicable to homeowners’ associations (HOA), too. Therefore, reasoning by analogy, except as to first mortgages, the HOA can also assert that its liens relate back to the recording of the HOA declaration, too. It is also possible that an HOA’s declaration recorded before July 2007 included a similar provision so it too could argue its HOA assessment liens related back to the date the HOA declaration was recorded, but this will need to be determined on a case by case basis.
This is a great result for associations!