WEST PALM BEACH, Fla. — A
decision last month in Florida’s 4th District Court of Appeal ruled
that inferior liens are not nullified during a foreclosure until a
certificate of sale is issued.
The Jan. 25 decision,
according to a report
on jdsupra.com, was a reversal of a ruling of the court last year
that said that all junior lienholders and unrecorded interests were
nullified when a final judgment was determined.
The ruling, according to an
on BakerDonelson.com, stemmed from the complaint, Ober v. Town of
Lauderdale by the Sea. In September 2008, a judgment of foreclosure
was brought on the land in question, according to a copy of court
From July 13, 2009, through Oct. 27, 2011, the town recorded seven
liens on the property for various code violations.
The property was sold at
foreclosure on Sept. 27, 2012, to Ober. After the purchase, the title
to the property was issued. However, starting in February 2013, the
town placed three more liens on the property.
Ober then filed a lawsuit in
an attempt to strike the liens against his property. The town fought
back to collect the liens that were issued prior to Ober buying the
property. At trial, Ober’s motion was denied, making him
responsible for the 10 liens on the property. The case was then
This initial judgment
interrupted years of how the settlement of liens on foreclosures
worked. The court basically held that junior lienholders were
nullified when a judgment was brought down. Therefore, all the liens
the town had on the property that Ober purchased were not affected by
the foreclosure, and that Ober was responsible for them.
According to a report
on bipc.com, a law-firm website, Ober filed for a rehearing with
support from amicus briefs by Florida legal
and banking associations.
In the new ruling, the court
rejected the initial argument that the lis pendens — or action
pending — statute applied only to liens that existed prior to
the judgment date.
“In my opinion, the court
reversed its ruling because they realized that they ruled in error,
largely due to the impact and well-reasoned amicus briefs that were
submitted, which the court did not have initially,” Diana Matson of
Baker, Donelson, Bearman, Caldwell, & Berkowitz, PC, told the
Florida Record. “The decision mentions that it followed the
reasoning of a number of the briefs submitted, including the Florida
Bar Business Law Section, the Florida Land Title Association and the
Florida Bankers Association.”
For example, the court
a brief submitted by the Florida Land Title Association wherein it
noted that the statute considers the lis pendens is active through a
The court also ruled that the
sale of the property should discharge all liens before and after the
final judgment of sale.
“Liens can continue to be
recorded against any property while it is in foreclosure,” Matson
The new ruling relieves
lenders of worrying about liens on a property when there is any delay
from final judgment until a foreclosure sale is held.
“The decision means that any
liens that are recorded against a property after the judgment is
entered will be wiped out when the foreclosure sale is completed, and
will not survive,” Matson said. “This gives the foreclosing
lender clean title, which is the goal of the foreclosure and always