TAX LIENS AND ASSOCIATION LIENS [Does a Tax Lien Wipe Out an Association Lien?] 2-4-15

TAX LIENS AND ASSOCIATION LIENS [Does a Tax Lien Wipe Out an Association Lien?]
By Ronald Scott Kaniuk, Esq.

Condominium and Homeowner Associations are given the power to assess maintenance fees against unit owners/property owners and are given the right to file a lien and foreclose on the lien in order to collect those assessments when they are not paid. Moreover, when a third party takes title to a property, the statutes (7118.116(1)(a) and 720.3085(1)) provide for the new owner to be “jointly and severally liable” with the prior unit/property owner “for all assessments that came due up to the time of transfer of title.”

However, these statutes are in conflict with Chapter 197 of the Florida Statutes governing tax collections, sales and liens. The relevant provisions of Chapter 197 set forth that the tax lien sale results in the termination of any junior or subordinate liens on the property.

The recent case of A to Z Properties, Inc. v. Fairway Palms II Condominium Assoc., Inc., No. 4D13-1267 (4th DCA January 2014) addressed the interplay of these statutes and concluded that “Sections 197.552 and 197.573(2) extinguish any covenant that creates a lien or requires a grantee to ‘expend money for any purpose’ for debts that precede the issuance of the tax deed.” Id. This decision followed those in the Second and Fifth District Courts of Appeal. Id. (citing Lunohah Invs., LLC, v. Gaskell, 39 Fla. L. Weekly D41 (Fla. 5th DCA 2013) and Cricket Properties, LLC, v. Nassau Pointe at Heritage Isles Homeowners Association, Inc., et al, 124 So.3d 302 (Fla. 2d DCA 2013)).

As frustrating as it may be to condominium and homeowner associations, the law in this area is clear. A tax lien foreclosure will wipe out the liability of a subsequent owner for the debts of the prior property owner.