After 6 years working in the Florida tax deed industry, we can say with confidence it is a sub-sector of the real estate world with a unique set of both challenges and opportunities.
One of our investors recently described it is both “complicated and legally convoluted” but acknowledged it can prove to be “tremendously profitable”.
Due to the tax deed market’s complex nature, it is vital for prudent investors to know the laws pertaining to tax deeds to protect themselves from improper claims of liability, such as those made by a Homeowners Association for unpaid assessment liens accrued prior to the property being sold at auction.
One of our clients recently bought a condo at a tax deed sale. He stopped by the HOA office to update contact information and was handed a claim of lien for unpaid HOA assessments for the past 3 years and asked to pay it in full. He was surprised by this claim of lien survival and contacted our team of attorneys, who recognized the unlawfulness of this and intervened.
Per Florida Statute §197.573(2) HOA assessments clearly do not fall into the category of surviving liens after a tax deed sale. The tax deed purchaser is not required to expend money for any purpose, except for municipal or county governmental unit liens. And while the issue of tax deeds and Association liens has been heavily litigated in FL for years, it has now has seen enough daylight to be settled. Association statutes Chapter 718 & 720 impose liability for past due assessments in relation to property acquired by the transfer of title, however, a tax deed does not represent a transfer of title but the commencement of a new, original and paramount title.
The courts ruled in favor of the tax deed statute during these cases because it is more specific in addressing the key issue of their survival or extinguishment after issuance of a tax deed; any conflict must be resolved in favor of the more specific statute.
The tax deed purchaser is NOT responsible for past Association liens as outlined in the Florida Statutes. You are only responsible for the Association dues from the tax deed sale moving forward.
Homeowners Associations do not enjoy losing money and may attempt to get paid regardless of the unlawful nature of such, and there are also HOA staff members that are inexperienced or have never heard of a tax deed. The HOA may attempt to recover the surplus funds for the assessments accrued prior to the sale, but not the tax deed purchaser.
This illustrates the importance of good counsel and an awareness of the law. The attorneys at Clear to Sell have formatted a standard letter for our clients when an Association makes an improper claim for amount due. If you would like a copy of this template please contact us today and we can get you the help you need to overcome this issue.
For additional information see:
Florida Statutes §197.552 and §197.573(2).
Lunohah Investments, LLC v. Gaskell, 158 So.3d 619, 621 (Fla. 5d DCA 2013).
A to Z Props., Inc. v. Fairway Palms II Condo. Assoc., Inc., 137 So.3d 453 (Fla. 4d DCA 2014).
Beneva Ridge Condo. Assoc., Inc. v. SRQUS, LLC, 145 So.3d 104 (Fla. 2d DCA 2013).
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