Can a Municipal Ordinance Give Superpriority for Municipal Code Enforcement Liens?

Municipalities have become increasingly aggressive in adopting and enforcing municipal building codes and other ordinances, to the detriment of mortgage holders. But can a municipal ordinance validly establish superpriority status for municipal code enforcement liens so that those liens will be paid from the proceeds of a foreclosure sale ahead of the amount due on a previously recorded mortgage?   Not without a state statute authorizing the municipalities of the state to enact such provisions, said the Florida Supreme Court in a recently decided case.¹

Florida, like many other states, generally gives priority to liens in the order that they have been filed for record, with some exceptions such as taxes and special assessment liens.²   Hence, under the state’s statutes, a validly recorded mortgage would be entitled to priority over a subsequently recorded code enforcement lien.

However, the City of Palm Bay, Florida, enacted a municipal ordinance containing a provision that liens created pursuant to a Code Enforcement Board order and recorded in the public record are similar to taxes and hence are superior to all other liens.³   To determine whether the provision is valid, the Florida Supreme Court analyzed whether Florida’s Constitution and state statutes authorized the municipality to enact the provision. Florida’s Constitution grants municipalities the power to have governmental, corporate and proprietary powers to enable them to conduct municipal government, perform municipal functions and render municipal services, and may exercise any power for municipal purposes except as otherwise provided by law.⁴  Although Florida has a state statute authorizing municipalities to establish local code enforcement boards with authority to create liens, the statute contains no provision expressly authorizing municipalities to establish superpriority for such liens.⁵

The court held in a 5-2 decision that because the municipal ordinance established a priority that is inconsistent with the priority established by the state’s statutes, the superpriority provision is invalid, stating that only the state legislature has the power to create an exception to the priority provisions of the state statutes.

For a copy of the case, go here:   http://www.floridasupremecourt.org/decisions/2013/sc11-830.pdf

¹ City of Palm Bay v. Wells Fargo Bank, N.A., SC11-830
² Florida Statutes Sections 28.222 (2), 695.11, 695.01 (1), 197.122 (1) and 170.09
³ City of Palm  Bay Ordinance 97-07, Section 1
⁴ Article VIII, section 2 (b), Florida Constitution
⁵ Chapter 162, Florida Statutes (2004)