Who Gets the Tax Surplus After a Tax Deed Sale? Association vs. Property Owner


By Dane E. Leitner

There has been a lot of talk recently about the Tax Reform Act that was passed by the Federal government and primarily deals with income tax.  However, there has also been recent activity with a different type of taxes, real property taxes.  In December of 2017 the Fourth District Court of Appeal in Florida issued an opinion in the case of Jenifer E. Calendar v. Stonebridge Gardens Section III Condominium Association that dealt with the distribution of surplus funds from a tax sale of an owner’s condominium unit.

Owners of real property have an obligation to pay their property taxes each year.  If they do not, the Tax Collector holds an auction for a tax certificate sale to pay off the delinquent taxes.  The successful bidder at the auction is issued a tax lien certificate.  This entitles the holder of the certificate a lien on the property and interest on the lien.  If the tax lien certificate and accrued interest is not paid off within two years, the holder of the certificate may force a public auction of the property.  This is called a tax deed sale.  At the tax deed sale, the winning bidder purchases the property.  The tax lien certificate holder is paid, and any remaining lienholders and the prior property owner may apply for any excess funds.

In the Stonebridge case, the condominium unit owner did not pay the taxes, and ultimately there was a tax deed sale.  There were surplus funds after paying the holder of the tax lien certificate.  The condominium association and the unit owner both sought the surplus funds.  The trial court ruled in favor of the condominium association and awarded it the surplus funds, and the unit owner appealed.  The unit owner’s argument was that the trial court erred in ordering the funds to be distributed to the association where it did not record a claim of lien or obtain a final judgement.  The Fourth District Court of Appeal disagreed with the unit owner’s argument, and affirmed the trial court’s ruling.

The analysis of the Fourth DCA’s decision is that pursuant to Section 718.116, Florida Statutes, the association has a lien on each condominium parcel to secure the payment of assessments, and that the lien is effective from and shall relate back to the recording of the original declaration.  Therefore, the statute provides the association with statutory lien, and recording is not a prerequisite to the enforcement of the lien for unpaid assessments.  I have previously litigated this same issue before and succeeded at trial based on the same analysis and arguments, but it was without the support of the Stonebridge decision.  The Stonebridge decision now provides precedent on this matter.  While this decision regarded a condominium association, the language is similar in the homeowners’ statutes, thus the same analysis should apply.

Born and raised in South Florida, Dane E. Leitner concentrates his practice in the areas of civil litigation, family and marital law, and condominium and homeowner association law.  If you have questions regarding your real estate and property matters including property taxes, please contact Dane at dleitner@warddamon.com or call (561)842-3000.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s