The Foreclosure of Local Special Assessment Liens: What, Where, Why, and How of the Civil Action and Enforcement Methods
In these unprecedented times, there has been a drought in local government revenues and collections. These are times of fiscal need for local governments (i.e., cities, counties, and special districts) that must be able to recoup their expenditures and outlays in providing special benefits to affected and benefited properties in their jurisdictions. In this article, the authors showcase to the local government practitioner the available remedies provided by F.S. Chs. 170 and 173, regarding foreclosure of municipal special assessment liens.
This article outlines the rules, elements, practices, and procedures of cases brought to foreclose municipal special assessment liens. Specifically, the topics addressed include the notice and publication requirements, timing, essential elements, and nature of the civil action to collect and foreclose on special assessment liens, pre-judgment and post-judgment aspects, appointment of a special master, and recovery of court costs and attorneys’ fees. The article is meant to be used as a starting point, as the local government practitioner should additionally refer to local rules and ordinances.
What Is/What Is Not a Special Assessment?
The determination of what constitutes a special assessment is a threshold issue. A special assessment lien is purely statutory.[1] Generally, a special assessment is a charge by a local government, including cities, charter counties, and non-charter counties, that has municipal power to impose special assessments.[2] Miami-Dade County, for example, possesses all municipal powers to impose special assessments and can utilize the procedures of F.S. Ch. 173 to enforce such obligations.[3] Therefore, it is important to note that only with legislative authority will a local government be able to enforce such a special assessment lien against a property.[4]
Historically, the rule was that there was no municipal power to impose a special assessment unless the authority was expressly granted by the state legislature.[5] Under the 1885 Florida Constitution, courts consistently followed “Dillon’s Rule,” which was a reservation of authority to the state legislature of powers that the legislature did not grant municipalities.[6] However, that has since been changed with the granting of broad home rule powers to municipalities when the Florida Constitution was revised and ratified by the electorate in 1968 and with the enactment of the Municipal Home Rule Powers Act in 1973, codified in F.S. Ch. 166.[7]
Under F.S. §166.021(1), municipalities are authorized “to exercise any power for municipal purposes except where expressly prohibited by law.”[8] Municipalities no longer have to look to the legislature for express legislative authorization, but may conduct “municipal government, perform municipal functions, and render municipal services” so long as the power is used for a valid “municipal purpose.”[9]
Among the powers of a municipality are the powers to levy ad valorem taxes and assess special assessments. Ad valorem taxes and special assessments are similar in that they are imposed on a property by a local government, but different in that the latter must be in relation to a specific benefit in added values on the property burdened.[10] Because a special assessment confers a benefit on the land burdened by the assessment, it is not a tax.[11] Taxes and special assessments are inherently different; therefore, they are “governed by entirely different principles.”[12]
When determining whether a charge is a special assessment, “[a] court must consider all the circumstances together, and none in isolation.”[13] To be treated as a valid special assessment, the charge “must meet two requirements: (1) the property assessed must derive a special benefit from the service provided; and (2) the assessment must be fairly and reasonably apportioned according to the benefits received.”[14]
The first prong is not satisfied merely due to an increased demand for specific services.[15] It cannot be used to collect for services that benefit persons and not the real property.[16] Courts specifically look for an enhancement to the property’s value.[17] As to the second prong, apportionment is based off the presumed benefit.[18] As an example, a property abutting an improved street via special assessment has a presumption of a special benefit.[19] Legislative findings made by the local government regarding whether a property receives a direct, special benefit and the apportionment of the special assessment will be upheld unless arbitrary.[20] It is considered a question of fact for a legislative body whether the property receives a benefit or was fairly apportioned.[21] As the presumption is that a special assessment is valid, the burden of proving otherwise is on the plaintiff, who is described later.[22]
By way of general examples, special assessments may be used to fund not only capital improvements, but also certain services.[23] However, this is not a complete statement of the rule. As to capital improvements, for example, “[s]treet improvements are beneficial generally to the city as well as specially to the owners of property that is specially assessed. Taxes are levied for one [the former] and special assessments for the other [the latter].”[24] As to services, emergency medical services, law enforcement services, fire rescue services, improvements to stormwater management system, street resurfacing, and an “Interim Government Services Fee” have been held to not be special assessments.[25] However, stormwater utility services, a mandatory garbage disposal system, an integrated fire rescue department, fire protection services, and solid waste disposal services were held to be valid special assessments. [26] The key here is that the direct, special benefit is shared only by those paying the special assessment without the requirement that it is shared uniformly.[27]
In an effort to provide clarity, F.S. Ch. 170 lists projects for which special assessments can be levied. However, this list is not exclusive or exhaustive and is simply supplemental. Caselaw and various Florida attorney general opinions recognize that special acts, enabling laws for special districts, and local city or county charters and codes can also, if provided expressly by legislation, provide for collection and later foreclosure of unpaid special assessment liens for valid special assessment. Besides Chs. 170 and 173, certain other Florida statutes authorize local government collection of special assessments.[28]
Therefore, local governments need to specifically state, through legislative act (e.g., local charter and/or code), whether certain charges imposed by the local government are a special assessment, with a caveat. When legislation so provides, special assessments may be used to collect solid waste or garbage fees.[29] A valid and enforceable special assessment lien is made pursuant to legislative authority by following the method prescribed.[30] If unauthorized and void, the special assessment in question may be enjoined at any time.[31] However, if the assessment is improperly apportioned, the special assessment is voidable and the local government may reissue and reapportion the assessment, so long as language in the granting authority states this may be done.[32] Even if the special assessment is void or voidable, the local government practitioner should be wary of the granting authority’s time limitations.[33]
Priority of Liens
Generally, priority of a special assessment lien is dictated by a local government ordinance. In one case, an ordinance dictated that special assessment liens after a certain date will be equal to ad valorem taxes and, therefore, superior to all other liens.[34] The court held that between the mortgage and the special assessment lien, which were both recorded after that date, the mortgage was inferior to the special assessment lien.[35] However, a loan by a municipality for home improvements as part of community redevelopment and related services is a loan for home improvements is not a special assessment and does not have priority over a purchase money mortgage as a result.[36]
In the end, priority to a municipal lien over a contract lien should be found in the law creating the municipal lien.[37] “Where a city has a statutory right to a lien on abutting lots for sidewalk improvements, any mortgage lien taken subsequent to the statute is subject thereto, and where the improvements are made, the lien of the city is superior to the mortgage lien.”[38] “The mortgagee has no greater vested right in this regard than the fee-simple owner, and the rights of both must yield alike to the sovereign power when exercised to impose proper and lawful taxes.”[39]
Some ordinances require recording and others do not. In one case, recording was required because retroactive effect of a special assessment lien is not implied and will not be read into an ordinance.[40] However, in another case, liens were not required to be recorded for validity purposes and were enforceable by in rem foreclosure.[41] It is a best practice and prudent to advise the municipal client to record special assessment liens so as to avoid the issue being raised.
Practice in F.S. Ch. 173: The Special Assessment Foreclosure Case
Generally, cities and home rule charter counties, such as Miami-Dade County, by their charters and Florida law may themselves exercise all municipal home rule powers, including bringing Ch. 173 foreclosure cases. After the constitutionality of Ch. 173 was decided by the Florida Supreme Court, the legality of Ch. 173 as a method of collection was resolved.[42] Subsequent to the enactment of the Municipal Home Rule Powers Act, municipal home rule powers have consistently been upheld as constitutional.[43]
Chapter 173 starts with the authorization of the foreclosure in a circuit court of special assessments and taxes, except ad valorem taxes imposed on real estate by a local government.[44] The practice, in pleading and procedure, is substantially the same as the foreclosure of real property mortgages. The foreclosure of a special assessment is a proceeding in rem and so parties to such proceedings need not be personally served with any process, unless expressly provided within Ch. 173. The proceeding can include multiple lots, tracts, or parcels of land, regardless of ownership. A judgment entered in such a proceeding is enforceable only against the land that is included.
Chapter 173 places conditions on when such a suit can be brought. A foreclosure of a special assessment may 1) be brought one year after it becomes due and payable; 2) include all or any part of the land that the special assessment remains due and payable; and 3) may include all claims or demands for unpaid taxes, tax certificates, or special assessments, as applicable.
Before filing suit, written notice of the intent to file must be provided 30 days before the actual filing to the last known address of the owner of record and the holder of any mortgage or lien.[45] The notice needs to include certain things such as the description of the parcel, the amount of the outstanding special assessment, and the approximated date that the complaint will be filed unless the outstanding special assessment is paid. The clerk of the circuit court mails the notice to the address of the owner of record and any recorded lien holders that is provided by the lienor’s counsel after diligent inquiry.
The suit would then be filed in a circuit court, similar to a mortgage foreclosure action. The plaintiff would be the city or town whose special assessments are delinquent and the defendant, the parcels of land, with no requirement to name the owner of any interest on the land. The complaint must specify the outstanding assessment per each land proceeded against. A certificate of attorney is prima facie evidence of compliance with the aforementioned notice requirement and must be attached to the complaint.
The foreclosure of a special assessment is an in rem suit, and so there is no requirement of individual service of process or naming of individual party defendants. The in rem nature of the foreclosure is not violative of due process.[46] The notice should be published in a newspaper of general circulation in the county, preferably in the legal notices section, once a week for two weeks directed to all interested parties, natural persons, and business entities, four weeks before appearance is required. The statutes provide a form that may be filled out with specific details of the suit to be published.[47]
All interested parties may file a motion to dismiss or an answer and affirmative defenses within the time given to answer a civil complaint under the Florida Rules of Civil Procedure. Similarly to any civil action, if no answer is filed, a default is entered against the defendant and a later final or summary judgment to fix the outstanding amount(s). Nevertheless, in its discretion, the court may enlarge the time for a defendant to appear and defend in the action for cause shown.
Affidavits of the due date, the amount due, interests, penalties, and nonpayment from an officer of the plaintiff who has the duty to collect the special assessment is prima facie evidence of the validity of the proceedings and assessment. If an interested party claims that the special assessment is illegal, then it must tender into the court registry the amount they claim is properly assessable concurrently with their answer.[48]
The judgment will allow for the collection of the principal, interest, penalties, the costs of the suit, and attorneys’ fees.[49] Attorneys’ fees are provided for by the statute and are apportioned among the various parcels named as defendants and will be decreased should the court find that there was an unnecessary separation of causes of action on the same or different parcels that could have been joined.[50]
The judgment will direct a special magistrate, appointed by the court, to sell the parcels to the highest and best bidder at an auction, advertised once a week for two consecutive weeks in a newspaper of general circulation within the county where the suit is pending.[51] One of the authors notes that in practice, many respondent owners or mortgagees would either pay the amounts in full or enter into an installment payment plan with the ability of the plaintiff selling the parcels without further notice if there is a default in payments. Before the sale by the special magistrate, anyone interested in the subject parcel may redeem it either by depositing the amount that would be specified in the judgment or by a written stipulation from the plaintiff that the subject parcel is dismissed from the suit.
The court, in its discretion, may order payment of the outstanding amount specified in the judgement in full, in installments, out of the proceeds of the sale or subject to city, county, and state taxes and special assessments.[52] The order may even specify to include the special magistrate’s fees as part of the judgment.[53] The special magistrate conveys free and clear fee simple title to the purchaser of the subject parcel, subject to liens of taxes or special assessments of equal dignity that are not specified in the judgement to be paid. The special magistrate then distributes the proceeds of the sale per the terms of the judgment with any surplus to be deposited into the registry to be later disbursed by court order.
Conclusion
Of particular note, the Ch. 173 procedures are optional for municipalities[54] and is liberally construed to be supplemental or an alternative method for the enforcement of special assessments.[55] A practitioner should look to the local government’s procedures set forth in its charter and code, in conjunction with Ch. 173, for definitive guidance on special assessment foreclosures.
[1] Town of Naples v. Naples Imp. Corp., 147 Fla. 94 (1941).
[2] Fla. Stat. §166 (2020).
[3] See generally City of Boca Raton v. State, 595 So. 2d 25 (Fla. 1992); State v. Sunrise, 354 So. 2d 1206 (Fla. 1978); City of Miami Beach v. Forte Towers, Inc., 305 So. 2d 764 (Fla. 1974).
[4] Simpson v. City of Brooksville, 137 Fla. 623 (1939).
[5] Williams v. Town of Dunnellon, 169 So. 631 (Fla. 1936). See also Heriot v. City of Pensacola, 146 So. 654 (Fla. 1933); Amos v. Mathews, 126 So. 308 (Fla. 1930); Malone v. City of Quincy, 62 So. 922 (Fla. 1913).
[6] City of Boca Raton, 595 So. 2d at 25; Collier County v. State, 733 So. 2d 1012 (Fla. 1999); Sarasota County v. Sarasota Church of Christ, Inc., 667 So. 2d 180 (Fla. 1995).
[7] Fla. Stat. §166.011 (1973), et seq. See also City of Boca Raton, 595 So. 2d at 25.
[8] City of Boca Raton, 595 So. 2d at 28 (quoting City of Miami Beach, 305 So. 2d at 764).
[9] City of Sunrise, 354 So. 2d at 1206.
[10] City of Boca, 595 So. 2d at 25. See also Klemm v. Davenport, 100 Fla. 627 (Fla. 1930).
[11] City of Gainesville v. State Dep’t of Transp., 778 So. 2d 519 (Fla. 1st DCA 2001).
[12] Klemm, 100 Fla. at 627.
[13] City of Gainesville, 778 So. 2d at 519.
[14] City of Boca, 595 So. 2d at 25. See also Fla. Sheriffs Workers’ Comp. Self-Insurance Fund v. Dep’t of Fin. Servs., 40 So. 3d 792 (Fla. 1st DCA 2010) (stating the two-prong test has only been applied to assessments on real property); Collier County, 733 So. 2d at 1012; Cooper City v. Joliff, 227 So. 3d 633 (Fla. 4th DCA 2017); Donnelly v. Marion County, 851 So. 2d 256 (Fla. 5th DCA 2003).
[15] Donnelly, 851 So. 2d at 256 (requiring a direct, special benefit). See also Collier County, 733 So. 2d at 1012.
[16] City of North Lauderdale v. SMM Properties, Inc., 825 So. 2d 343 (Fla. 2002).
[17] Id.
[18] City of Naples v. Moon, 269 So. 2d 355 (Fla. 1972).
[19] Hanna v. City of Palm Bay, 579 So. 2d 320 (Fla. 5th DCA 1991); Rosche v. City of Hollywood, 55 So. 2d 909 (Fla. 1952).
[20] Sarasota County, 667 So. 2d at 180; Hanna, 579 So. 2d at 320; Hackney v. McKenney, 151 So. 524 (Fla. 1933).
[21] Sarasota County, 667 So. 2d at 180.
[22] Rosche, 55 So. 2d at 909 (stating the burden of proof that the plaintiff must bear).
[23] Donnelly, 851 So. 2d at 256.
[24] Klemm, 100 Fla. at 640.
[25] City of North Lauderdale, 825 So. 2d at 343; Quietwater Entm’t, Inc. v. Escambia County, 890 So. 2d 525 (Fla. 1st DCA 2005); Cooper City, 227 So. 3d 633; City of Gainesville, 778 So. 2d at 519; Hanna, 579 So. 2d at 320; Collier County, 733 So. 2d at 1012; Klemm, 100 Fla. at 627. See also Donnelly, 851 So. 2d at 256.
[26] Sarasota County, 667 So. 2d at 180; Charlotte County v. Fiske, 350 So. 2d 578 (Fla. 2d DCA 1977); Desidirio Corp v City of Boynton Beach, 39 So. 3d 487 (Fla. 4th DCA 2010); Lake County v. Water Oak Mgmt. Corp., 695 So. 2d 667 (Fla. 1997); Harris v. Wilson, 693 So. 2d 945 (Fla. 1997).
[27] Collier County, 733 So. 2d at 1012; Cooper City, 227 So. 3d 633; Donnelly, 851 So. 2d at 256.
[28] See Fla. Stat. §197.3631 (2020); Fla. Stat. §197.3632 (2020); Fla. Stat. §125.01 (2020) (regarding Home Rule Powers for counties); Fla. Stat. §166.201 (2019) (regarding home rule powers for municipalities).
[29] See Stone v. Town of Mexico Beach, 348 So. 2d 40 (Fla. 1st DCA 1977); Stein v. City of Miami Beach, 250 So. 2d 289 (Fla. 3d DCA 1971); Harris, 693 So. 2d at 945; Charlotte County, 350 So. 2d at 578.
[30] Donnelly, 851 So. 2d at 256.
[31] Hackney, 151 So. 2d at 524.
[32] Cooper City, 227 So. 3d at 633 (explaining that the special assessment was voidable due to method of calculation and language stating that city was required to reissue is improperly apportioned).
[33] Markham v. Neptune Hollywood Beach Club, 527 So. 2d 814 (Fla. 1988) (barring a challenge to a void tax assessment for failure to meet deadlines); Park-A-Partners v. Dade County, 487 So. 2d 94 (Fla. 3d DCA 1986); Whitman v. City of North Miami, 223 So. 2d 105 (Fla. 3d DCA 1969) (estopping a cancellation of a special assessment where notice was given and failed to meet deadlines); Carpenter v. Dade County, 269 So. 2d 775 (Fla. 3d DCA 1972) (barring an action challenging a special assessment for failure to meet code deadlines).
[34] Gleason v. Dade County, 174 So. 2d 466 (Fla. 3d DCA 1965). See also Miami Shores Vill. v. Gilbraltar Sav. & Loan Ass’n, 561 So. 2d 27 (Fla. 3d DCA 1990) (relying on Gleason, 174 So. 2d at 466).
[35] Miami Shores Vill., 561 So. 2d at 27.
[36] Id.
[37] Lybass v. Town of Ft. Myers, 47 So. 346 (Fla. 1908).
[38] Id. See also Gailey v. Robertson, 123 So. 692 (Fla. 1929).
[39] Gailey, 123 So. at 692.
[40] Dade County v. Fed. Nat. Mortg. Ass’n, 161 So. 2d 255 (Fla. 3d DCA 1964).
[41] Dade County v. Certain Lands, 247 So. 2d 787 (Fla. 3d DCA 1971) (holding that because the procedure was not clear in the ordinance, failure of county to mail copies of notices of liens that were required to be recorded to property owners simultaneously with recording thereof did not vitiate liens and bar foreclosure).
[42] Coral Gables v. Certain Lands, etc., 110 Fla. 189, 149 So. 36 (1933).
[43] City of Miami Beach, 305 So. 2d at 764.
[44] Fla. Stat. §173.01 (2020).
[45] Fla. Stat. §173.04 (2020).
[46] City of Coral Gables v. Certain Lands Upon Which Taxes Are Delinquent, 149 So. 3d 41 (Fla. 1933).
[47] Id.
[48] Fla. Stat. §173.07 (2020).
[49] Fla. Stat. §173.08 (2020).
[50] Id.
[51] Fla. Stat. §173.09 (2020).
[52] Fla. Stat. §173.10 (2020).
[53] Metro. Dade Cty. v. Certain Lands upon which Assessments are Delinquent, 471 So. 2d 191 (Fla. 3d DCA 1985).
[54] Fla. Stat. §173.13 (2020).
[55] Fla. Stat. §173.14 (2020).
Catherine M. Carbonell, J.D., LL.M., is currently the legislative and policy aide to a Miami-Dade County commissioner. She received her J.D. from the University of Florida Levin College of Law and her LL.M. in real property development from the University of Miami School of Law.
Rafael E. Suarez-Rivas, J.D., B.C.S., is currently the chief legislative and policy advisor to a Miami City commissioner. He has formerly served as an assistant city attorney, supervisor and chief assistant city attorney, city attorney, and an assistant county attorney. He is board certified in city, county, and local government law and received his J.D. from NSU Shepard Broad College of Law.
This column is submitted on behalf of the City, County and Local Government Law Section, Donald Stephen Crowell, chair, and Ellie Neiberger, editor.
