James Ober v. Town of Lauderdale-By-The-Sea, Fourth District Court of Appeals, Case No. 4D14-4597 (Broward County Circuit Court, Case Number CACE 14-006782 (05)).
Real estate investors, municipalities, and community associations may gain some clarity about post-judgment liens if the Florida Supreme Court decides to hear Ober v. Town of Lauderdale By-the-Sea, Case No.: 4D14-4597 (Fla. 4th DCA, January 25, 2017). The case has garnered interest from municipalities, creditors and the real estate sector regarding the enforceability of liens recorded against a property during the uncharted gap between judgments and sales.
The issue arose when a lender filed to foreclose its mortgage, recorded a lis pendens against the property, obtained a final foreclosure judgement, but did not complete the foreclosure sale. Instead, the property sat vacant and unattended for four years. During that time, the town of Lauderdale-by-the-Sea cited various code violations and imposed liens valued at hundreds of thousands of dollars. The lender ultimately completed its foreclosure sale in 2012 wherein Ober was the successful bidder.
Ober sued Lauderdale-by-the-Sea to quiet title and strike the liens recorded from the date of the lender recording its lis pendens through the date of the foreclosure sale. Lauderdale-by-the-Sea counter sued to foreclose its liens. The trial court ruled in favor of Lauderdale-by-the-Sea.
On appeal, Fourth District Court of Appeal initially affirmed the trial court’s decision, but withdrew its opinion and found in Ober’s favor after a rehearing that saw numerous amicus briefs filed by industry experts decrying the Court’s initial ruling.
The final decision relied on the language in Florida Statute Section 48.23(1)(d) (lis pendens statute), which provides:
[T]he recording of . . . notice of lis pendens . . . constitutes a bar to the enforcement against the property described in the notice of all interests and liens . . . unrecorded at the time of recording the notice unless the holder of any such unrecorded interest or lien intervenes in such proceedings within 30 days after the recording of the notice. If the holder of any such unrecorded interest or lien does not intervene in the proceedings and if such proceedings are prosecuted to a judicial sale of the property described in the notice, the property shall be forever discharged from all such unrecorded interests and liens.
As the foreclosure was prosecuted to a judicial sale, the Court held the town’s liens were discharged. However, in an acknowledgment of the issue of “the long lag time between the foreclosure judgment and the foreclosure sale … [and the] resolution of the competing interests—of the Town, the lending and title insurance industries, property owners, and buyers at foreclosure sales” as one of great public importance, the Fourth District Court of Appeal certified the question to the Florida Supreme Court.
Regardless of how the Florida Supreme Court comes down on the issue, implicit in the Fourth District Court of Appeal’s ruling is a call to action for the Florida legislature to address the undue hardship borne by property owners, communities, and municipalities when lenders fail to timely proceed with foreclosures. Time will tell whether they hear the message.
Click here to read a summary prepared by the Town Attorney.
Reprinted with permission from AriasBosinger
