HOMEOWNER'S ASSOCIATIONS; ASSESSMENT LIENS; PRIORITY: Association lien does not have priority over mortgages recorded subsequent to filing of declaration simply because declaration provides a right in association to file a lien for unpaid assessments; liens will have priority, however, if the declaration clearly provides for a continuing lien priority from time declaration is filed. Holly Lake Association v. FNMA, 660 So. 2d 266 (Fla. 1995).

A prior case had found that an association assessment had priority over the landowner's subsequent homestead declaration where the association declaration provided that the association "shall have a lien upon such owner's lot for the aforesaid amount . . . until such amount is paid." The "aforesaid amount" in fact consisted of a continuing recreation use assessment. Walter E. Heller & Co. Southeast, Inc. V. Williams, 450 So.2d 1108 (Fla. 1985).

Not surprisingly, the association in this case relied upon Heller to argue that its lien had priority over mortgage liens recorded after the declaration. But the court concluded that the language of the declaration in this case did not provide for an existing lien, but rather for the right to assess a lien. The language read as follows:

"In the event the monthly . . . charge is not paid when due, [Association] shall have the right to a lien against said site . . . for any such unpaid charges; and shall have the right to enforce said lien in any manner provided by law for the enforcement of mechanics' or statutory liens. . . "

The court stated that this language did not put the mortgagee sufficiently on notice of the possibility that the association lien might prime the mortgage lien.

At another point in the case, the court also distinguished Heller by pointing out that it involved a dispute between the landowner and a creditor while the instant case involved a dispute between two creditors. The court does not indicate why this would make for a difference in outcome, so we are left in the dark as to what it had in mind. It does not seem to say, however, that it would be impossible for an association to establish priority given the appropriate language in the declaration.

"We hold that in order for a claim of lien recorded pursuant to a declaration of covenants to have priority over an intervening recorded mortgage, the declaration must contain specific language indicating that the lien relates back to the date of the filing of the declaration or that it otherwise takes priority over intervening mortgages." 660 So.2d at 269.

Comment: It is refreshing, and comforting, for a court actually to undertake to tell lawyers how to do things so as to achieve the desired result. But lawyers should be wary of undertaking to establish "superpriority" of assessment liens until they are comfortable that FNMA and FHLMC will be willing to accept mortgages subject to such priming liens. If they are not, then the developer probably will want to make the assessments subordinate. Fortunately, again, the court tells us how do accomplish that result as well.

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