Equitable/Senior Liens in FC (Florida)

1 Reply

Hi Guys,

First wanted to say, I have this question with my attorney but wanted to pose the question to BP as well. Thanks!!

Looking at an asset in Florida that has a large city lien on the property and an equitable lien on the property coming soon from the receivership placed in the asset (Both senior liens). The note has some considerable equity in the property. The borrowers have abandoned the property, thus the receivership in place while its vacant.

1. If we pay off either or both liens prior to foreclosure, are those eligible lender expenses that we can add to the loan payoff? Any reason they cant be added as Lender expenses to the payoff?

2. If we don't pay them off pre-foreclosure and finish the foreclosure, if its purchased by a third party, they are responsible for those liens and we get paid our payoff amount right? Is the new buyer responsible to satisfy those liens right away before taking title?

3. If the property doesn't sell at foreclosure and we get the property back, are we expected to pay those liens off right away? Or can we take title subject to those senior liens and pay them off when the asset is sold? As this asset has equity.

Thank You!

Ian

Lien priority is usually by date of recording. If you are buying first mortgage lien then and it was recorded before city lien and other lien then there is a chance you can wipe it out in a foreclosure if you name both lien holders as a defendant. 

Lately it's been hard to wipe out city lien but there are several cases where cities lost in the claim that the lien survived after first mortgage foreclosure. If there are code violations then those will stay but it's my believe that any monetary liens assessed by the city will be wiped out if city is named as defendant.  You will have to fight for it with the city though as they don't like to remove these from the property. 

Either way I would name both lien holders in a foreclosure case and won't hurry to pay them off. If someone buys the property at the auction, it will be their problem.

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