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Chad U.
  • Investor
  • Boca Raton, FL
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Code Violation Liens in Florida

Chad U.
  • Investor
  • Boca Raton, FL
Posted Aug 13 2016, 12:25

Hi BP,

Here is my dilemma, I won an Auction.com property which states they will be providing a SWD and insurable title, yet the addendum supplied by the bank in the purchase agreement states: "BUYER UNDERSTANDS AND ACKNOWLEDGES THAT THE PROPERTY MAY CONTAIN MECHANIC’S OR MATERIALMEN’S LIENS OR OTHER LIENS RESULTING FROM ALLEGED VIOLATIONS OF LOCAL ORDINANCES AND BUYER IS TAKING SUCH PROPERTY SUBJECT TO THOSE LIENS, WHICH MAY OR MAY NOT IMPACT BUYER’S ABILITY TO TRANSFER THE PROPERTY IN THE FUTURE."

After speaking with several reps at Auction.com, they assured me that their instructions from the bank are that all liens will be cleared at closing.  This is obviously a contradiction to what is in the addendum, and I've asked them to give me written confirmation stating as such rather than just a verbal to which they are not able provide.  They also emailed me to say that since an insurable and marketable title will be provided, then if they are unable to do this then they would cancel the transaction. But my concern is this code lien is listed as a possible Exception in the title commitment and if I sign the addendum with the current wording this would waive my right so I'm obviously not signing as is.  

HOWEVER, as we've debated and discovered in the past in reference to City of Palm Bay v. Wells Fargo Bank, seen here: https://www.floridabar.org/DIVCOM/JN/JNJournal01.n...

code violation liens get wiped out at foreclosure in the state of Florida.  But in reviewing the foreclosure file, the county where this lien was imposed was not named or joined as a Defendent.  My question is, should they be named in the foreclosure action in order for this lien to be extinguished?  

This fine is not small - $328K, and after speaking with the code enforcement supervisor, she advised that these liens are generally reduced down to 10% which is still a signficant amount, and much more than the equity/profit in this deal. Of course, Auction.com wants this purchase agreement signed asap and EMD sent within 24 hrs, but I've been stalling until I get this sorted. My title co is not familiar or able to give advice, nor is another RE lawyer I spoke with.

Any words of wisdom from @Steve Babiak @Wayne Brooks @Patrick L.?   

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