Municipal liens are not extinguished in a foreclosure
Dear Mr. Feichthaler:
I recently purchased a house in Cape Coral at foreclosure sale. I checked to confirm that all mortgages on the property were included in the foreclosure, so I thought I was getting clear title. However, after fixing up the place, I went to sell the property and have been told there are thousands of dollars in liens on the property. These liens relate to code enforcement orders from the City of Fort Myers! How is this possible?
-Chris P.
Dear Chris:
Caution must always be exercised when purchasing foreclosed properties. As you alluded to, it is important that all creditors are included in the foreclosure lawsuit, otherwise their liens will continue to be valid, even though other liens have been extinguished.
However, there are significant exceptions to the rule that all debts are erased from properly noticed foreclosures, and you appear to be dealing with one of them. Municipal liens, like code enforcement liens, are not extinguished in foreclosure. This is the public policy of Florida to protect governments and taxpayers from being stuck with the entire bill of enforcement and compliance of violating properties. As you note, there was no violation on your property, but properties in Fort Myers. What likely has happened here was that the previous owner of your house also owned other properties in Lee County. One or several of those properties were liened by the City of Fort Myers. When a code enforcement lien is placed against a property, like a judgment, it applies against ALL properties that the owner has in the County. Even after one of those other properties are foreclosed, the lien remains until paid off.
Many times, these cities and counties may allow your property to be released for a reduced amount, so long as they still have a lien against other properties. Before paying this lien in full, it is recommended to call the government agency that has these liens, and seek a release. They may agree to release your property for a reduced amount as well. To protect against these costly mistakes, engage professionals who can make sure you know exactly what you are purchasing. Good luck.
Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.