NEWS

New Decision: It’s a lien! (Calendar v. Stonebridge Gardens Section III Cd’m)
December 15, 2017

A dissent occasionally rises to become law, and the author vindicated; however, usually that occurs decades later. Turnaround was evident in Wednesday’s decision by the Fourth District Court of Appeal in Calendar v. Stonebridge Gardens Section III Cd’m Ass’n, Inc., Case No. 4d 16-3393 (Fla. 4th DCA, December 13, 2017).

The issue in Calendar was whether when disbursing surplus sale proceeds a Florida condominium association that has not recorded a claim of lien has priority over the immediately former unit owner. The holding may have significant implications far beyond the tax sale context.

The court focused on the following Condominium Act language:

(5)(a) The association has a lien on each condominium parcel to secure the payment of assessments. . . . [T]he lien is effective from and shall relate back to the recording of the original declaration of condominium . . . . However, as to first mortgages of record, the lien is effective from and after recording of a claim of lien in the public records of the county in which the condominium parcel is located.

§718.116(5)(a) Fla. Stat. (2016). The juxtaposition of the last sentence lead the court to hold that “recording a claim of lien is not an absolute prerequisite to the enforcement of a lien for unpaid assessments.” The court commented that recording may only be of significance when the association’s assessment lien and a mortgage lien are contesting for priority.

In holding, the court sided with Judge Shepherd’s dissent in Aventura Management, LLC v. Spiaggia Ocean Cd’m Ass’n, 105 So. 3rd 637 (Fla. 3rd DCA, 2013). Readers of these missives may recall Judge Shepherd’s plaintive plea in response to the Aventura mortgage foreclosuire holding asking “What happens to the [association’s] lien?” Id. at 640. Judge Shepherd concluded:

. . . [I]t is apparent the fundamental purpose of the Legislature in promulgating section 718.116 was to assist condominium associations to be made whole in the collection of past due assessments, while at the same time not unduly impairing the value of collateral held by first mortgagees. In furtherance of this design, the Legislature has given condominium associations a statutory lien on each condominium unit over which it has jurisdiction, to secure payment of assessments without the necessity of filing a claim of lien in the public records, with the single exception of first mortgagees, where record notice is required. § 718.116(5)(a).

Id at 640. Thus, the condominium association without recording a lien had a lien in priority to the former’s owner claim, the lien

This decision raises a number of interesting questions for the practitioner and clients.

  • Whether to record a lien or not to record? Particularly because of the potential of mortgage issues, the answer would appear still to be yes. The “yes, record” would appear to be reinforced by the desire to avoid issues that may occur in Districts other than the Fourth District which issued the Calendar opinion, at least until, or if, the Supreme Court of Florida rules on the issue. There is also the practical advantage of record notice to stop disputes about notice cold. Further, there is that tantalizing adjective “absolute” modifying “prerequisite” as in recording is not an “absolute prerequisite” as quoted above. leaving the court’s field of play wide open as to when recording may be a prerequisite.
  • What is the vitality of the assessment lien after a mortgage foreclosure? The Calendar court also further quoted Judge Shepherd’s dissent which has caused the scratching of many heads when published originally:

The majority opinion . . . . first concludes, correctly in my view, that [the] Condominium Association’s statutory lien, afforded by section 718.116(5)(a), Florida Statutes (2008), “survives the foreclosure.” Maj. Op. at 5; see also Lassiter v. Kaufman, 581 So. 2d 147, 148 (Fla. 1991); Contos v. Lipsky, 433 So. 2d 1242, 1245-46 (Fla. 3d DCA 1983). . . .

Thus, we are still faced with the “conundrum” of if there is a lien that survives foreclosure, then what is the value of that lien particularly in light of Villas of Windmill Point II POA, Inc. v. Nationstar Mortgage, LLC, Case No.: 4D16-2128 (Fla. 4th DCA October 25, 2017), limiting the assessment liability of the lender’s grantee.

  • Will this apply to homeowners’ associations? Similar language in the Homeowners’ Association Act, at least for post 2007 associations, may lead to the same result.

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

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

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