Until recently, Florida courts had not determined what happens to liens placed on a property between the time of final judgment of foreclosure and sale. On August 24, 2016, Florida’s Fourth Appellate District decided Ober v. Town of Lauderdale-by-the-Sea, which resolved the issue, holding that liens placed on the property after the final judgment of foreclosure but prior to judicial sale are not discharged by Florida’s lis pendens statute.
Florida’s lis pendens statute provides that the recording of lis pendens constitutes a bar to the enforcement against the property described in the notice of all interest and liens unrecorded at the time of recording the notice, unless the holder records its liens within 30 days of the recording of lis pendens. In Ober, a non-party bank recorded a lis pendens on the subject property as part of a foreclosure proceeding in November 2007. The court issued a final judgment of foreclosure in September 2008. However, the property was not sold at foreclosure until September 2012. During the four years between the final judgment of foreclosure and the sale, the Town of Lauderdale-by-the-Sea recorded seven liens on the property relating to various code violations.
The purchaser at the foreclosure sale challenged those liens, arguing that the lis pendens statute discharged all liens prior to the foreclosure sale. The court disagreed, reasoning that the recording of a lis pendens serves as the notice of an action pending against the property in state or federal court. That action ends when a judgment becomes final — in Florida, 30 days after the entry of final judgment if there is no appeal. Once the lis pendens expires, liens may be placed on the property. As a result, the Lauderdale-by-the-Sea could place liens on the property for code violations that occurred between the final judgment and foreclosure sale.
This ruling is potentially significant for numerous stakeholders in Florida foreclosure proceedings.