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Super Priority Liens Created by Municipalities Found to be Invalid

By Tracy M. Evans, Esq., Associate, Saxon, Gilmore, Carraway & Gibbons, P.A.

A recent decision by the Florida Supreme Court amounts to a victory in the area of creditors’ rights with respect to the lien priority of first mortgages. On May 16, 2013, the Florida Supreme Court issued a 5-2 decision ruling that cities cannot create “super priority” liens that trump the priority of first mortgages on properties. Central to the case was a City of Palm Beach Ordinance which made liens created by the City’s Code Enforcement Board “superior in dignity to all other liens, titles, and claims.” As the controlling authority, the Court cited Article VIII of the Florida Constitution which grants municipalities broad powers “except as otherwise provided by law” as the governing authority. The Court found that the City’s Ordinance was in direct conflict with Florida Statutes Section 695.01(1), which codifies the common law rule of first in time, first in right, with respect to the priority of liens. The Court held that this conflict between the Ordinance and the State Statute rendered the City’s Ordinance invalid under the Florida Constitution.

The full text of the opinion can be found here:
http://www.floridasupremecourt.org/decisions/2013/sc11-830.pdf

 

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