Florida Upholds Tax Lien Priority for Improper Homestead Exemption | Practical Law

Florida Upholds Tax Lien Priority for Improper Homestead Exemption | Practical Law

A recent Florida appellate decision discusses the priority of a tax lien over a previously recorded valid mortgage lien stemming from an improperly claimed homestead tax exemption. The court held that tax liens, by statute, have priority over prior recorded mortgages.

Florida Upholds Tax Lien Priority for Improper Homestead Exemption

Practical Law Legal Update w-011-2737 (Approx. 4 pages)

Florida Upholds Tax Lien Priority for Improper Homestead Exemption

by Practical Law Real Estate
Published on 02 Nov 2017 • Florida
A recent Florida appellate decision discusses the priority of a tax lien over a previously recorded valid mortgage lien stemming from an improperly claimed homestead tax exemption. The court held that tax liens, by statute, have priority over prior recorded mortgages.
On October 18, 2017, in Miami-Dade County v. Lansdowne Mortgage, LLC, the District Court of Appeal of Florida for the Third District held that the County's tax lien, assessed as a result of an improperly claimed homestead exemption, was superior to a prior recorded mortgage lien ().

Background

Lansdowne recorded a mortgage secured by the subject property in September 2007. The County tax assessor determined that the property improperly received homestead benefits. Miami-Dade County recorded a tax lien against the property in January 2014.
Lansdowne initiated a foreclosure action against the property in May 2015. Lansdowne claimed it had priority over the County's tax lien because the mortgage was recorded before the tax lien in accordance with Florida's recording statute (695.01(1), Fla. Stat.).
The trial court granted Lansdowne's motion and entered a final judgment of foreclosure.
On appeal, the County argued that the tax lien was a super lien under Section 197.122(1) of the Florida Statutes.
Lansdowne argued that Section 197.122(1) did not apply because Section 196.161 of the Florida Statutes was a more specific statute discussing the priority of tax liens that are imposed to remedy an improper grant of homestead tax exemptions.

Outcome

The appellate court reversed the trial court's decisions, holding that the trial court improperly prioritized Lansdowne's mortgage over the County's tax lien in violation of Section 197.122(1) of the Florida Statutes.
The court noted that Florida enacted several statutes that grant certain liens priority over other liens under the recording statute. The court held that Section 197.122(1) grants the County's tax lien superiority over all other liens, including Lansdowne's mortgage lien.
Even though Section 196.161 of the Florida Statutes discusses improperly granted homestead exemptions, the court held that the statute relates to attachment and not priority.

Practical Implications

This decision has significant consequences for parties engaging in real estate transactions in Florida. When conducting due diligence, purchasers, lenders, and title companies should all be aware of the priority status of tax liens resulting from an improperly claimed homestead exemption. Parties should carefully scrutinize whether there is a valid basis for claiming a homestead exemption if the exemption is claimed by the borrower.