GET IN LINE – ASSOCIATION ASSESSMENT LIEN PRIORITY

At issue in today’s column is a subject we recently addressed regarding whether an association must record its assessment lien in the public records of the County in which the community is located in order for it to be effective and whether such lien relates back to the initial date of recording of the declaration. At least, as to a surplus that results from a tax foreclosure sale, the answer, in most circumstances, is that the association does not need to record its assessment lien in order to argue entitlement to the surplus, and the lien will relate back to the date of initial recording of the declaration, as was the outcome of a recent Fourth District Court of Appeal case, Calendar v. Stonebridge Gardens Section III Condominium Association, Inc., decided December 17, 2017.

In this case, Mrs. Calendar was the unit owner who lost her home as a result of a tax foreclosure. After the foreclosure sale, Mrs. Calendar asserted that she, and not the condominium association, was entitled to the surplus that resulted from the tax foreclosure sale. The appellate court disagreed and affirmed the trial court’s decision to award the surplus to the condominium association. In so doing, the appellate court cited section 718.116(5)(a), Florida Statutes (2016), which provides:

“The association has a lien on each condominium parcel to secure the payment of assessments. … [T]he lien is effective from and shall relate back to the recording of the original declaration of condominium, or, in the case of lien on a parcel located in a phase condominium, the last to occur of the recording of the original declaration or amendment thereto creating the parcel. 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…”

This type of lien is referred to as a “statutory lien,” and based on this statutory provision, the Appellate Court reasoned that the recording an assessment lien was not an absolute prerequisite to the enforcement of the lien for unpaid assessments, so long as the declaration of condominium was recorded, which it obviously was, and so long as a first mortgage was not at issue, which it was not.

As an aside, with the aforementioned in mind, if a declaration of condominium was recorded before April 1, 1992, then the statutory assessment lien does not apply because the relevant statute did not yet exist. In those situations, the declaration of condominium can be amended to include a provision similar to the statutory lien. Alternatively, subjecting the declaration of condominium to Chapter 718, Florida Statutes, “as amended from time to time,” a phrase otherwise known as “Kaufman” language, would incorporate the statutory lien provisions, as well as all other substantive changes to Chapter 718, Florida Statutes.

Homeowners’ associations have a similar statutory lien which also relates back to the date of initial recording of the declaration of covenants. However, the statutory lien does not apply to a homeowners’ association community’s declaration recorded prior to July 1, 2008. Prior to July 1, 2008, (absent any specific language in the association’s declaration indicating that the assessment lien relates back to the date the declaration was recorded), a prior recorded mortgage lien had priority, as was decided by the Florida Supreme Court in 1995 in the case of Holly Lake Association v. Federal National Mortgage Association. The relevant section 720.3085, Florida Statutes, was amended and became effective on July 1, 2008 which codified the current assessment lien relation back principle. Therefore, as to those HOA communities whose declarations were recorded previously, in order to have assessment lien rights which relate back to the date the declaration was initially recorded, the declaration of covenants must be amended to include a provision similar to the text of the statutory lien statute; or, in the alternative, the declaration of covenants may be made subject to Chapter 720, Florida Statutes, “as amended from time to time,” (a/k/a Kaufman language) thereby incorporating the relation back provision, as well as all other substantive changes to Chapter 720, Florida Statutes.

The Stonebridge case can also be used to assert priority of an unrecorded association assessment lien over many other types of liens, too, such a mechanics’ lien recorded against a unit/home by an unpaid contractor. Nevertheless, with the aforementioned mind, it is always better to be safe than sorry. Therefore, taking the time, and sometimes extra step, to record the association‘s assessment lien all but guarantees the priority of the association’s assessment lien.

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