Liens play a crucial role in securing debts and protecting the interests of various parties involved in property transactions. Therefore, understanding lien priority is essential for Florida homeowners, contractors, and lienholders. This can help you deal with construction projects, association dues, or property foreclosures.
Here’s an overview of the different types of liens and their hierarchy to help empower you.
Types of Liens in Florida
Before delving into the intricacies of lien priority, it’s essential to understand the various types of liens that can attach to a property in Florida. Here’s a brief overview of some common liens:
- Mechanic’s Liens: These liens are from contractors, subcontractors, or material suppliers without payment for their work on a property.
- Judgment Liens: These liens arise from court judgments against property owners.
- Mortgage Liens: Mortgage lenders file these liens to secure their loans.
- Tax Liens: These liens are from government entities to collect unpaid taxes.
- HOA Liens: Homeowner associations can file these liens against homeowners who fail to pay dues or assessments.
- Lis Pendens Liens: These liens are to notify the public that a property title lawsuit is pending.
Understanding Lien Priority
In Florida, a property can have various liens attached to it, including those related to construction, association dues, taxes, and mortgages. These liens represent legal claims against the property and directly impact its title. The lien recorded first generally has the highest claim on the property’s value in the event of foreclosure or sale. However, there are exceptions to this rule, and certain liens may enjoy priority over others based on their classification.
Mechanic’s Liens
The timing of when a mechanic’s lien, or construction lien, attaches depends on the type of work performed. For instance, liens for design professionals and site improvement may attach automatically. In some cases, filing a Notice of Commencement can cause the lien to attach earlier. Once attached, these liens are ranked in the following order of priority:
- Liens filed by laborers.
- Liens of all parties other than the contractor, i.e., subcontractors.
- A construction lien filed by the general contractor.
Tax Liens
In Florida, tax liens are ‘super liens’ with the highest priority. Florida’s statute governs the priority of tax liens in the state. Under Florida Statute 197.122(1), “ad valorem tax liens filed against Florida real property shall take priority over a previously filed mortgage.” This means that even if a mortgage lender has recorded a lien against a property, the tax lien will still have priority.
Other Liens
Judgment, mortgage, and other liens are subject to Florida’s lien priority rules. They will have priority over other liens if filed earlier (with the exemption of tax liens). Therefore, creditors should file liens as soon as possible to ensure it has the highest priority. Homestead exemption can also affect lien priority. It helps to shield a homeowner’s primary residence from creditors.
Identifying liens and determining their priority can be a challenging task. To make this easier, you could connect with a lien search company like Florida Lien Search. Our expert team specializes in navigating the complex landscape of liens, ensuring that you clearly understand the encumbrances on your property. Contact us to learn more!