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Suggested:
Potentially increasing lender risks and thus the cost of financing, the Third District Court of Appeals clarified to the chagrin of many lenders the consequences of an improper homestead real property tax exemption in Miami-Dade County v. Lansdowne Mtg, LLC, Case No.: 3D 16-1046 (fla. 3rd DCA, October 18, 2017).
When dealing with priority of claims, the chronology is frequently important:
· September 2007: Lansdowne’s mortgage was executed and recorded;
· January 2014: County tax lien recorded as a result of a determination of improper homestead benefits; and,
· May 2015: Lansdowne files a mortgage foreclosure action including the county as a defendant.
The trial court granted the Lansdowne’s Motion for Summary Judgement pursuant to the priority of lien recording statute, §695.01(1) Fla. Stat. (2015).
The appellate courts analysis recognized the priority provided by the recording statute but noted exceptions, one being:
[a]ll taxes imposed pursuant to the State Constitution and laws of this state
shall be a first lien, superior to all other liens, on any property against which the
taxes have been assessed . . . .” See City of Palm Bay, 114 So. 3d at 928.
§197.122(1) Fla. Stat. (2015). The court differentiated the statutory authority for the “priority” of the lien, as opposed to the authority for when a lien “attaches” to real property. Thus, the court rejected the lender’s assertion that the statutory exemption structure does not subordinate the tax lien to the previously provided mortgage. The attachment statute prevails:
The lien herein provided shall not attach to the property until the
notice of tax lien is filed among the public records of the county
where the property is located. Prior to the filing of such notice of lien,
any purchaser for value of the subject property shall take free and
clear of such lien. Such lien when filed shall attach to any property
which is identified in the notice of lien and is owned by the person
who illegally or improperly received the homestead exemption. . . .
§196.161(3) Fla. Stat. (2015) (emphasis added).
Thus, there appears to be a race to the courthouse between the taxing authorities and others. This decision likely will encourage buyers and lenders of property for which a homestead tax exemption is claimed to undertake a minimum review of the basis for claiming the exemption. Title insurance may also be of added importance to provide protection to the lender/purchaser.
A couple of extra considerations: In light of the above quote that the “purchaser” takes free and clear, how the court will treat a lis pendens? Please note that this only address the homestead tax exemption, not the devise or creditor claim homestead provisions.
Michael J. Gelfand
Past Chair
Real Property, Probate and Trust Law Section
of The Florida Bar
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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section
© 2017 Michael J. Gelfand
Florida Bar Board Certified Real Estate Attorney
Florida Supreme Court Certified Mediator:
Civil Circuit Court & Civil County Court
Fellow, American College of Real Estate Attorneys
