It's The Law
Tax Deeds Are Powerful
I have my eye on a condominium that has not paid taxes. I understand it will be scheduled for a tax deed sale, but I am worried that I will buy at the tax deed sale and then end up having to pay for liens and assessments. Can you explain how tax deeds affect liens and assessments?
As I wrote in a previous article, tax deeds follow tax certificates. A tax certificate is sold by the Tax Collector for unpaid property taxes in May of each year. Bidders bid the interest rate the certificate will bear and if successful, pay the unpaid taxes and cost of sale. In exchange, the buyer gets a tax certificate bearing the interest bid. If the tax certificate is not redeemed by property owner within 2 years, the holder of the certificate can request the property be sold to pay off the certificate and issue a tax deed. The sale is by the Clerk of Courts. The tax certificate expires after 7 years.
To apply for a tax deed, the tax certificate holder must do all of the following:
1. Sign and file a written application.
2. Pay all amounts required to redeem all outstanding tax certificates not owned by the applicant.
3. Pay any current property taxes that are due, a title search fee of $100, an application fee of $75 and a $60 Clerk of Court fee.
Before asking for a tax deed foreclosure sale, a certificate holder should arrange title search to see if there are any liens against the property. By statute, a tax deed wipes out almost all interests in the property, except governmental liens that are not satisfied through disbursement of the proceeds of sale. Also surviving at tax deed sales are certain easements, restrictions and covenants. Those matters can interfere with intended use and should be reviewed carefully.
If the property is purchased by anyone other than the certificate holder, the clerk is required to pay the certificate holder all of the sums he or she paid, including the amount required to redeem the certificate. Although the tax certificate sale is conducted by the Tax Collector, a tax deed sale is conducted by the Clerk of Court.
Florida statutes make the property interest terminating power of a tax deed quite broad. It extinguishes the lien of any recorded mortgage, with the exception of certain mortgages held by FDIC in a corporate capacity. It also distinguishes other liens of the Federal Government, including tax liens, as long as the Federal Government was given proper notice. It can also wipe out condominium assessments.
The condominium assessment issue was recently addressed by a purchaser at tax deed sale in the case of Bailey II, Inc., vs. CDip Beach Resort Condominium Association, Inc. In that case, the condominium association argued that the Condominium Act trumped the tax deed sale statutes. It argued that in Section 116 of Florida's Condominium Act provides "a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title" and that language was controlling. The court rejected that argument, explaining that the association's position would fundamentally alter the priority of private debts over tax deeds. The only possible outcome of adopting that position would be a reduction in the amount recovered by governmental units at public tax auctions. The court ruled the tax deed purchaser was exempt from liability for condominium assessments accruing prior to the date the tax deed was issued.
Although a tax deed is a powerful conveyance, it is also more dangerous than the traditional conveyance process. Constitutional and statutory requirements concerning notice and procedure must be strictly met or the resulting deed is voidable. For that reason, anyone thinking about purchasing at a tax deed sale should retain an experienced attorney to review both title and the tax deed sale file before bidding at the sale.
By: William G. Morris, Esquire
William G. Morris is an attorney with offices at 247 North Collier Boulevard on Marco Island, Florida. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney.
Questions for this column can be sent to: William G. Morris, e-mail: firstname.lastname@example.org or by fax, (239) 642-0722 or
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