Lien searches can’t be overlooked in real estate transactions in the Sunshine State. Florida law allows attaching liens even to abandoned properties. A house or condo you are planning to buy may have liens associated with it. In Florida, new owners are responsible for paying any liens attached to properties. So, you should be aware of your best course of action when a property has multiple liens.
Also, if you are planning to place a lien, you should keep reading. The faster you do it, the better. Keep reading to discover the reason why you should hurry up.
Another scenario where knowledge of liens priority could come in handy is foreclosure. We will take a look at that as well.
Subordination of Liens in Florida
Subordination is when a lienholder gives up or lowers their priority position in the queue. In Florida, lienholders can enter into subordination agreements to rearrange the priority of their liens. This is usually done to facilitate financing or development projects. Such agreements are legally binding and must be executed in compliance with Florida law.
Priority of Liens in Florida
According to priority, lienholders are paid in the order their liens were recorded. Florida law outlines some exceptions. For example, as we discussed before, tax liens have super-priority status.
Factors that Affect Subordination and Priority
So, let’s summarize several factors that can influence the priority of liens in Florida:
- Earlier recorded liens take precedence over later ones.
- Tax liens have statutory priority over other liens, regardless of the recording date.
- Parties can voluntarily agree to subordinate their liens to others through written agreements.
- In foreclosures, lienholders may intervene to protect their interests and ensure proper satisfaction of their liens based on priority.
Liens in Foreclosure Proceedings
After a lender files a lawsuit against the borrower, all lienholders are notified and allowed to participate in the proceedings. Potential lienholders are:
- Mortgage Holders
- Judgment Creditors
- Tax Authorities
- HOAs
- CAs
How Are Liens Resolved during a Foreclosure?
During foreclosure proceedings, various strategies may be employed to resolve competing liens on the property in Florida:
Parties may negotiate settlements to satisfy or release liens, often through payment arrangements or agreed-upon terms. These negotiations can occur both before and during foreclosure proceedings.
Disputes over lien priority may arise when multiple liens exist on the property. Those who have liens placed on the property may contest the priority of their liens based on the following factors:
- Recording Date
- Statutory Priority
- Subordination Agreements
Lienholders have the right to intervene in foreclosure proceedings to protect their interests. This may involve:
- Asserting Priority Rights
- Challenging the Validity of Other Liens
As we all know, during foreclosures, houses are sold at a public auction. The resulting payment is used to pay lienholders in order of priority. Surplus proceeds may also be distributed to junior lienholders or the property owner.
Florida Lien Search is your trusted partner for various types of lien searches in Florida. Contact us today.