Florida enjoys a lot of top rankings in the U.S., including the longest shoreline in the lower 48. In recent years, Florida ranked first in the nation for higher education by U.S. News and World Report. Florida also ranks as one of the top two destinations for tourism.
But here’s the one that may impact you the most.
According to research from iProperty Management, Florida has the highest concentration of Homeowners Associations (HOAs), with 67.3% of homeowners belonging to an HOA. In addition, 44.5% of Florida’s population is in an HOA, which is also the highest in the U.S.
Compare that to Arkansas where only 3% of homeowners live in an HOA and you just know it is a bigger part of your world as a title agent in Florida than it is for agents in other states.
Given the fact that 80.3% of new homes sold in 2020 were in HOA communities, these numbers will continue to escalate in Florida.
It’s not just the sheer numbers that make HOA lien searches so imperative in Florida. It is because Florida is a “super lien” state when it comes to HOAs, which raises the stakes if they are overlooked.
Individual states can and have written laws to create super liens, which means certain liens on a property can be automatically granted a higher priority over other liens, such as placing an HOA lien’s interest in front of the mortgage lien. Florida is one of 20 states that are categorized as “super lien” states with regard to HOA liens.
In contrast, most other states HOAs include language in their contracts that places its lien automatically in second or junior position to the mortgage.
As you know, the priority of a lien is usually determined by the order in which the liens were recorded. One of the perennial exceptions are property tax liens, which have priority over all other liens.
When a house is sold, the lender wants to know that all liens are cleared from the title of the property so that they retain that first priority position. In a Super Lien state an HOA lien can literally jump ahead of the mortgage lien.
Where all of this becomes most problematic is when there is a foreclosure. In a super lien state like Florida, the HOA gets paid first, the lender second, and if there is anything left, other junior lien holders are paid off. If the lender doesn’t realize sufficient funds from the value of the property, they are going to be left short-changed, a reality that is exacerbated by an HOA lien.
This makes effective HOA processing really crucial in the state of Florida.
The complicated and ubiquitous nature of HOAs in Florida prompted us to include HOA/COA processing as one of the most vital services we offer through Network Transaction Solutions’ services. We are dedicated to supporting our customers’ transaction processes by delivering a comprehensive suite of services based on the individual needs of our customers. Contact us anytime to explore what options may enhance the business growth plans for your agency.