In my April 18th post, I discussed the recent trend of municipalities enacting ordinances designed to give their code enforcement liens “superpriority” over prior-recorded mortgages. Basically, the municipalities have sought to achieve for their liens the same priority as that afforded liens for unpaid real estate taxes. In 2011, the 5th District Court of Appeal decided the case of City of Palm Bay v. Wells Fargo Bank, N.A., holding that the City of Palm Bay could not “…grant its code enforcement liens superpriority over a prior recorded mortgage…” That decision was appealed to Florida’s Supreme Court who issued its ruling on May 16.
Fortunately for lenders, the Court resolved this issue in favor of mortgage holders, holding that a municipality has no authority to enact and enforce an ordinance that creates superpriority for code enforcement liens over prior recorded mortgages. The Court found that because the Florida Legislature has established by statute the priority of rights with respect to interests in real property, municipalities were preempted from circumventing this general scheme by enacting their own ordinances to achieve superpriority.
With the Court’s decision in hand, title insurance companies and mortgagees should breathe a collective sigh of relief.