Code Enforcement Liens vs. Florida Foreclosure Surplus Funds

Haynes Law Group

We are often asked whether a client can retain Surplus Funds from a Foreclosure Sale of their property, only to find out later that there are several encumbrances on the property, including Code Enforcement Liens. Sometimes a property is abandoned because of hurricane damage that needs to get repaired or because a family member that was living in the property has passed away. If the property goes into disrepair from improper upkeep or the damage to the property is not repaired from weather related damage in a timely manner, then the City or County Code Enforcement may impose fines that can turn into a lien on the property. During this period that the property is not being properly maintained, it may end up being foreclosed on.

If the property is foreclosed on and the property sold at auction, what happens to these Code Enforcement Liens? Can they take some or all the Surplus Funds (if any) if the property is sold at auction? The short answer is yes, but there is at least one way to get around this. A code enforcement fine generally consists of money that is fined against the homeowner due to disrepair of the property from weather related damage or from the lack of upkeep of the property in general. It could be due to a natural disaster like a hurricane, from a fence being down and not replaced, from the yard being overgrown and full of junk cars, or even from a swimming pool not being properly maintained for a very long time. These are just a few examples of what could cause fines to be levied on your property by code enforcement. These fines, if not paid, could turn into liens on your property. It could be very costly because if these fines are not paid and the issue with the property not taken care of, the amounts just keep building. Code enforcement could then put a lien on the property due to these fines building up.

If your property is sold at auction and there is a surplus, you might not be able to receive the surplus funds due to the liens. However, there is at least one way of getting around this. Homestead. A code enforcement lien works the same as any other type of lien that might be on your property. The major difference is that even though this is still a subordinate or junior lienholder, it might not have to be paid if the property was homestead AND the property owner plans on using the surplus funds to purchase another homestead property within a reasonable amount of time. In the case of Town of Lake Park v. Grimes, from the 4th District Court of Appeals in 2007, the Court noted that if a property is considered to be homestead property at the time of the foreclosure sale, and the proceeds of the sale are intended to be reinvested in another homestead, then the proceeds are exempt from the code enforcement lien. These proceeds would not be exempt if they are not reinvested in another homestead in a reasonable time and would then be subject to being paid back on the code enforcement lien.

This is just one of the many bits of knowledge that you will only get when you hire a qualified Foreclosure Surplus Attorney. Here at the Haynes Law Group, P.A. we will fight for every penny you are to receive from a Foreclosure Surplus or Tax Deed Surplus. If you think you may be entitled to foreclosure surplus funds in Florida, please call my firm and I will personally give you a free consultation. I handle foreclosure surplus cases in every county in Florida. And I don’t get paid unless you do.

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