Code enforcement liens that were granted “superpriority” status by a local government ordinance were held to lack priority to a prior-recorded mortgage in a recent Florida appellate court decision. City of Palm Bay v. Wells Fargo Bank, N.A., 36 Fla. L. Weekly D161 (Fla. 5th DCA January 21, 2011).
The City of Palm Bay enacted an ordinance creating its Code Enforcement Board in 1997. Under the ordinance, liens on real property created by the Board would be co-equal with state and local tax liens, and would be “superior in dignity to all other liens, titles and claims.”
In 2007, Wells Fargo filed an action to foreclose a mortgage recorded in 2004 and named the City as a defendant due to two code enforcement liens recorded after the mortgage. The City asserted its code enforcement liens had priority over the mortgage by virtue of the ordinance. Wells Fargo argued that the ordinance’s granting of superpriority status to code enforcement liens was in conflict with Section 695.11, Florida Statutes, which codified the common law rule of “first in time, first in right” as applied to the priority of recorded liens.
The appellate court upheld the trial court’s determination that the granting of superpriority status to code enforcement liens by the ordinance was ineffective. While recognizing that the City’s “home rule” power to enact local ordinances was broad, the court held that such ordinances may not conflict with state statutes. The court found that granting superpriority status to code enforcement liens clearly violated the “first in time, first in right” doctrine codified in Section 695.11, Florida Statutes.
As of this writing, the City’s motion to certify the case to the Florida Supreme Court is pending at the 5th DCA.