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© 2016 National Tax Lien Association www.NTLA.org 1

Tax Deed Lien Identification

Megan Schmidt, Esq.

About cleartosell.com• Alternative to Quiet Title Action to obtain insurable

title from our underwriting partners

• Fast accurate method for determining the quality of title on tax deed properties

• Current Certification Rate: 91%

• Average Determination made: 17 business days

• Fixed price

• Cost beneficial referral program

• Currently in Florida only, but rolling out in other states later this year

© 2014 National Tax Lien Association www.theNTLA.com

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About me…• Senior Staff Attorney at Clear To Sell, LLP

• Certification Manager• Work to cure title defects and revolve conveyance issues• Improve process and procedure

• Background:• Financial Services • Real Estate• Business Transactions

• Professional Association• Palm Beach County Bar Association – Transaction Law

Committee• Real Property Probate Trust Law Section of the Florida Bar• Leadership Palm Beach County, FOCUS Class of 2015• Published Author – Journal of Human Rights (December

2013) and ActionLine (Spring 2016)


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Florida Tax Deeds – Chapter 197

• Tax Certificate issued and sold by Tax Collector for non-payment of taxes §197.432

• Purchaser waits for 2 years, then submits Application for Tax Deed §197.502

• An abstract title search is completed and the Clerk provides notice to those parties in interest, §197.502(4) and publication is required §197.512

• The property is sold at public auction §197.542, §197.502(6)(a-c)


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Do Your Pre-sale Research!

• Counties provide list of lands available just before the sale

• Property Appraiser/ Tax Collector/ Official Records

• Local Ordinances

• Association Dues/ Assessments

• Physical inspection of the property – DO NOT TRESPASS

Stop by Booth #4 to pick up our pre-auction handout!


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Fla. Stat. §197.552

Except as specifically provided in this chapter, no right, interest, restriction, or other covenant shall survive the issuance of a tax deed, except that a lien of record held by a municipal or county governmental unit, special district, or community development district, when such lien is not satisfied as of the disbursement of proceeds of sale under the provisions of s. 197.582, shall survive the issuance of a tax deed.


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Primary Exceptions that survive the tax deed sale:• Easements for conservation purposes, or for public service

purposes or for drainage or ingress and egress. §197.572

• The usual restrictions and covenants limiting the use of property; the type, character and location of building; covenants against nuisances and what the former parties deemed to be undesirable conditions, in, upon, and about the property; and other similar restrictions and covenants; but this section shall not protect covenants creating any debt or lien against or upon the property, except one providing for satisfaction or survival of a lien of record held by a municipal or county governmental unit, or requiring the grantee to expend money for any purpose, except one that may require that the premises be kept in a sanitary or sightly condition or one to abate nuisances or undesirable conditions. §197.573

• Oil, gas and mineral rights and other subsurface rights that are severed from the surface rights or assessed taxes separately from the fee are not eliminated by tax deed. § 193.481


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Government liens• Survival of government liens inevitable

• Most accrue $100-$250/day• 162.09

• Bring property into compliance first

• Options:• Release based on what is paid from the surplus• Negotiate the lien with the code enforcement office/

governing board• Bring a hearing before a special magistrate for reduction

of a fine

• Escheatment• 197.502(8)(a)


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Federal liens

• IRS Federal Tax Lien – 120 day right of redemption• 26 U.S.C. § 7425(d)

• SBA holds a Mortgage lien - claim 1 year right of redemption• 28 U.S.C. § 2410(d)(1-3)

• Expire with allotted time or waiver by the Agency


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Association Statutes

• A parcel owner is jointly and severally liable with the previous parcel owner for all unpaid assessments that came due up to the time of transfer of title. • §718.116(1)(a) (Condominium Association)

• §720.3085(2)(b) (Homeowners Association)

• This is in stark contrast to these same liens that are extinguished under §197.552


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Statutory Construction/ Plain language• Association statues impose liability for past due

assessments in relation to property acquired by transfer of title.

• However, a tax deed does not represent a transfer of title, but constitutes the commencement of a new, original, and paramount title, so the liability is not imposed.• Sugarmill Wood Oaks Vill. Ass’n v. Wires, 766 So.2d 487, 489

(Fla. 5th DCA 2000); Blume v. Giles, 143 Fla. 615 (1940); see also Dean v. Kane, 106 Fla. 814 (1932); as applied in Cricket Props., LLC v. Nassau Pointe at Heritage Isles Homeowners Ass’n, 124 So.3d 302, 307 (Fla. 2d DCA 2013).


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Statutory Construction/ Specificity

• The tax deed statutes specifically address the survival or extinguishment of liens and encumbrances after issuance of a tax deed, and any conflict must be resolved in their favor as the more specific statute. • Suntrust Banks of Fla., Inc. v. Don Wood, Inc., 693 So. 2d

99, 101 (Fla. 5th DCA 1997). See Also Adams v. Culver, 111 So.2d 665, 667 (Fla. 1959). As applied in Cricket at 307.


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The Final Outcome…

• The combined effect of the tax deed statutes is to preserve the validity of covenants that control the use of the property, but extinguish any covenant that creates a lien or requires a grantee to ‘expend money for any purpose’ for debts that precede the issuance of the tax deed. Both the lien and the grantee’s liability for the preexisting debt are extinguished upon issuance of the tax deed• Cricket Props., LLC v. Nassau Pointe at Heritage Isles

Homeowners Ass’n, 124 So.3d 302, 307 (Fla. 2d DCA 2013); Lunohah Investments, LLC v. Gaskell, 158 So.3d 619, 621 (Fla. 5th DCA 2013); A to Z Props., Inc. v. Fairway Palms II Condo. Assoc., Inc., 137 So. 3d 453 (Fla. 4th DCA 2014)


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How will you see them?

• A Claim of Lien for past due amounts ACCRUED PRIOR TO the tax deed sale, and recorded in the Official Records AFTER the tax deed sale

• Claims for amounts accrued prior to the tax deed sale in your Estoppel Letter when you go to sell the property

DO NOT JUST WASTE YOUR CAPITAL AND PAY THEM


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Why are we still seeing these inappropriate liens/claims?• Error in the Association paperwork/system

somewhere

• The Association did not inform its attorney the property was sold at tax deed sale

• The Association attorney or representative has never worked with a tax deed before

Best way to respond? Phone call/ email/ CTS Template


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Recently…

• Does the Clerk have standing to overturn the sale?

• Should the current years taxes be paid from the surplus?

• How should multi year HOA special assessments be addressed?

• Federal liens with municipal/county lien collections implications?

• Should there be uniformity amongst the Clerks?


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Questions?

Booth #[email protected]

1-855-680-4980

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