Florida code enforcement liens: what investors should know

A code lien usually starts small. Somebody's grass gets too tall, or a fence goes up without a permit, and an inspector opens a case. If it gets fixed, the case closes and that's the end of it. If it doesn't, the fines start adding up every day, and eventually the city or county records a lien against the property.

Some of the best deals in Florida have a code lien sitting on them, mostly because the lien scares off buyers who don't understand how they work.

How a case becomes a lien

Most Florida cities and counties handle code enforcement under Chapter 162 of the Florida Statutes, through a code enforcement board or a special magistrate. The property owner gets notice and a chance to fix the problem. If they don't comply by the deadline, the board can impose a fine for every day the violation continues.

Under § 162.09, those fines can generally run up to $250 a day for a first violation and up to $500 a day for a repeat violation, with higher caps available to some local governments. The board can then record a certified copy of the fine order in the public records, and from that point it's a lien on the property.

Do the math on a violation that's been ignored for a year at $250 a day and you can see how a $500 fix turns into a lien bigger than the property's equity.

Can the city foreclose?

Sometimes. A code lien that has gone unpaid for three months can be foreclosed by the local government, but Chapter 162 doesn't allow foreclosure of a code lien on homestead real property. So a homesteaded owner can live with a huge lien for years, while the same lien on a rental or vacant house can actually lead to the city taking action. Either way, the lien has to be dealt with before a clean sale can close.

Liens are often negotiable

Here's the part a lot of buyers miss. Many Florida cities and counties have a lien reduction or mitigation process, sometimes called a lien settlement or a fine reduction hearing. Once the violation is fixed, the owner or a new buyer can ask for the fine to be reduced, sometimes down to the city's administrative costs.

Every jurisdiction does this differently. Some reduce fines routinely once the property is in compliance. Others are strict. Before you write an offer, call the code department or check its website and find out what the local process looks like and how long it takes.

Working a lien into your offer

• ✓Get the current payoff from the city, not from an old record. Fines keep running until compliance.
• ✓Find out what's actually wrong with the property. The violation itself might be cheap to fix even if the lien is enormous.
• ✓Check for other liens and other open cases on the same parcel. They usually travel together.
• ✓Price in the time. A reduction hearing can take weeks or months, and your title company will want the lien handled before closing.

Be upfront with the owner about what you've found. Many of them don't know a reduction is even possible, and walking them through it builds a lot of trust.

Finding properties with code liens

Code liens are recorded in the official records, and open cases sit in each city's or county's code enforcement system, but they're spread across dozens of separate websites. PropTalon pulls code cases and liens from the counties and cities that publish them and ties them to the parcel. See current numbers for Lee County code liens or Miami-Dade County code liens.

Lien amounts change as fines accrue and settle, so confirm everything with the jurisdiction before you rely on it. This is general information, not legal advice.