You are at the department store getting ready to walk into the checkout lane, when a pair of shiny sunglasses lined up near the checkout line catch your eye. You spend the next 45 seconds debating whether you need a 3rd pair of sunglasses that you will eventually lose. You decide you don’t need them, look up, and see a line 5 people deep waiting to check out. When you got there, there was no line. Although you were first, you will have to go to the back of the line. In this case, “first come, first served” does not apply.
The concept of “first come, first served” is very important when it comes to lien priority. A lien is a claim on residential or commercial property for certain legal obligations of the owner. These obligations can vary, from unpaid charges for maintenance and improvements, to outstanding balances on mortgage loans and taxes. A valid lien must be satisfied either by full payment of the obligation or by satisfaction when the property is sold.
Generally, lien priority is determined by the recording date of the lien. The general rule is first in time, first in priority. Some liens, such as property tax liens, have automatic superiority over essentially all prior liens. Typically, the matter of priority comes up in foreclosure actions because if a senior lien holder forecloses, it wipes out any junior liens. However, if a junior lien holder forecloses, its foreclosure is subject to the senior lien.
If you fail to make your homeowner’s association (HOA) payments, the HOA has the right to file a lien against the property. The HOA (lien) foreclosure will wipe out any liens recorded after it was recorded in the public records (possibly a second mortgage). All liens recorded prior to the HOA lien will survive. Keep in mind the first mortgage will not be extinguished from an HOA foreclosure.
If you have stopped paying your HOA dues and are facing an HOA foreclosure in Miami-Dade, Broward, or Palm Beach County contact The Hershey Law Firm, P.A. at (954) 303-9468 to help protect you from any potential consequences.