City of Hallandale Beach v. Susana Shames

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

CITY OF HALLANDALE BEACH,
Appellant,

v.

SUSANA SHAMES, et al.,
Appellees.

No. 4D2025-1230

[June 3, 2026]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Gary M. Farmer, Jr., Judge; L.T. Case No.
062011CA018533AXXXCE.

Jennifer Merino, City Attorney, and Maxine Karl Streeter, Assistant City
Attorney, City of Hallandale Beach, for appellant.

Benjamin Haynes of Haynes Law Group, P.A., Longwood, for appellee
Susana Shames.

GROSS, J.

This case involves a dispute over the disposition of $261,738.61 in
surplus funds following the foreclosure sale of a five-unit apartment
building (the “Property”) in Hallandale Beach, Florida. The City of
Hallandale Beach says it was entitled to receive the entire amount because
it recorded more than $1 million in code violation liens after an initial final
judgment of foreclosure. The circuit court decided that the City could
recover only $671.01 attributable to a utilities lien recorded prior to the
filing of the foreclosure complaint.

We affirm the circuit court’s ruling. As to the code violation
assessments recorded after the $671.01 utilities lien, the City was not a
“subordinate lienholder” within the meaning of section 45.032(1)(b),
Florida Statutes (2024), so it was not entitled to file a claim against the
surplus for those liens.

Background Facts
In August 2011, Branch Banking and Trust Company (the “Bank”) filed
a foreclosure petition against appellee Susana Shames (“Shames”) and her
late spouse, Moises Shames, the record owners of the Property. The
foreclosure petition named the City as a defendant on the ground that the
City “may claim to have some right or interest” in the Property arising out
of “a LIEN recorded in Official Records Book 47359 Page 474” of the
Broward County public records. This lien was for water/sewer/garbage
services and totaled $671.01.

On the same day the Bank filed its foreclosure action, it recorded a
notice of lis pendens on the Property.

The City’s answer admitted “the allegations of the Complaint as it
pertains to the subject property,” but asserted that “if there are proceeds
from the sale remaining after satisfying the debt owed to the [Bank], then
the Court should order the City’s liens satisfied with such proceeds.”
When the City filed this answer, the $671.01 utilities lien was the only lien
that the City had recorded against the Property.

In 2012, the circuit court entered the original final judgment of
foreclosure. In the years that followed, Shames filed multiple suggestions
of bankruptcy and motions to cancel the foreclosure sale. An initial
foreclosure sale occurred in 2017 but was vacated later that year.

In August 2024, an amended final judgment was entered, and the
Property was sold at a public sale for $950,100. The amended final
judgment contained paragraphs stating that (1) on the filing of a certificate
of sale, “all persons claiming under or against defendant(s) since the filing
of the Notice of Lis Pendens shall be foreclosed of all estate or claim in the
property” and (2) [a]ny person claiming an interest in the surplus from the
sale, if any, other than the property owner as of the date of the lis pendens,
must file a claim before the clerk reports the surplus as unclaimed.” See
§ 45.031, Fla. Stat. (2024).

Soon after the foreclosure sale, the clerk filed a Certificate of
Disbursements reflecting a $261,738.16 surplus.

The Fight Over the Surplus

In September 2024, Shames moved for release of the surplus funds.

Later that month, the City filed its notice of claim for surplus and moved
for an evidentiary hearing, alleging that $1,712,200 in code violation liens
remained unpaid and were attached to the Property. These code violation

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liens were recorded between 2014 and 2023, after the filing of the lis
pendens and the entry of the original final judgment. The City requested
that the circuit court enter an order directing the clerk to disburse the
entire surplus to the City.

Shames objected to the City’s claim for surplus, arguing that the City
was entitled to recover only the $671.01 lien. Shames asserted that “[t]his
is the only lien to have been shown as an encumbrance on the property
[on] the face of the pleadings.” Shames noted that the pleadings did not
“include the City’s subsequent code enforcement liens that were recorded
after the date of the filing of lis pendens in this instant action.”

The City later filed an affidavit of indebtedness, attaching all code
violation liens recorded against the Property in the public records.

The Trial Court’s Disbursement Order

Following a hearing, the trial court entered an order disbursing surplus
funds, limiting the City’s claim for surplus funds to the $671.01 original
lien for which the City was named as a subordinate lienholder in the
Bank’s complaint.

The court denied the City’s claim for surplus funds as to the code
enforcement violations occurring “after the date of the recording of the lis
pendens in this action.”

The City’s Arguments on Appeal

The City argues that the trial court “erred by limiting the City’s claim
for surplus funds to the lien filed and recorded before the lis pendens and
specifically identified in the pleadings.” The City contends that the plain
text of section 45.032, Florida Statutes (2024), is clear and unambiguous
and mandates payment of surplus funds to subordinate lienholders that
file a timely claim. The City maintains that the trial court improperly “took
the requirement to qualify as a subordinate lienholder in paragraph (1)(b)
and grafted it onto paragraph (2) as a limitation on claims.”

Statutory Procedure for Disbursement of Surplus Funds
After a Foreclosure Sale

Section 45.032, Florida Statutes (2024), governs the disbursement of
surplus funds after a judicial foreclosure sale. As the Third District has
explained, the “distribution of surplus foreclosure proceeds is governed by
a plain and unambiguous statutory procedure . . . .” Pineda v. Wells Fargo

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Bank, N.A., 143 So. 3d 1008, 1011 (Fla. 3d DCA 2014). “Where the
legislature has provided such a process, courts are not free to deviate from
that process absent express authority.” Id.; accord Nat’l Equity Recovery
Servs., Inc. v. Imperial Fund Tr. 2019-I, 361 So. 3d 876, 880 (Fla. 4th DCA
2023); Corey v. Unknown Heirs by Neuffer, 301 So. 3d 380, 383–84 (Fla.
2d DCA 2020).

Section 45.032(1)(b) defines a “subordinate lienholder” as “the holder
of a subordinate lien shown on the face of the pleadings as an
encumbrance on the property.” § 45.032(1)(b), Fla. Stat. (2024). Section
45.032(1)(b) goes on to say that “[a] subordinate lienholder includes, but
is not limited to, a subordinate mortgage, judgment, tax warrant,
assessment lien, or construction lien.” 1 Id.

Under section 45.032(2), “[t]here is established a rebuttable legal
presumption that the owner of record on the date of the filing of a lis
pendens is the person entitled to surplus funds after payment of
subordinate lienholders who have timely filed a claim.” § 45.032(2), Fla.
Stat. (2024).

The “owner of record” is defined as “the person or persons who appear
to be owners of the property that is the subject of the foreclosure
proceeding on the date of the filing of the lis pendens.” § 45.032(1)(a), Fla.
Stat. (2024).

Claims by subordinate lienholders are also referenced in section
45.031, which requires the final judgment to include the following
language:

IF THIS PROPERTY IS SOLD AT PUBLIC AUCTION, THERE
MAY BE ADDITIONAL MONEY FROM THE SALE AFTER
PAYMENT OF PERSONS WHO ARE ENTITLED TO BE PAID
FROM THE SALE PROCEEDS PURSUANT TO THIS FINAL
JUDGMENT.

IF YOU ARE A SUBORDINATE LIENHOLDER CLAIMING A
RIGHT TO FUNDS REMAINING AFTER THE SALE, IF ANY,
YOU MUST FILE A CLAIM WITH THE CLERK NO LATER THAN

1 By contrast, the term “subordinate lienholder” does not include a superior
lienholder. “Because senior lienors’ rights are unaffected by foreclosure, holders
of liens which are senior in priority have no right to share in a surplus produced
by the foreclosure of a junior mortgage.” Garcia v. Stewart, 906 So. 2d 1117,
1121 (Fla. 4th DCA 2005).

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THE DATE THAT THE CLERK REPORTS THE FUNDS AS
UNCLAIMED. IF YOU FAIL TO FILE A TIMELY CLAIM, YOU
WILL NOT BE ENTITLED TO ANY REMAINING FUNDS.

§ 45.031(1)(a), Fla. Stat. (2024).

Case law establishes that a junior lienholder “has priority over the
property holder for foreclosure surplus funds.” Golindano v. Wells Fargo
Bank, 913 So. 2d 614, 615 (Fla. 3d DCA 2005). “Surplus money arising
from a sale of land under a decree of foreclosure stands in the place of the
land itself in respect to liens thereon or vested rights therein.” Rosen v.
Dorn-Kothe, Inc., 171 So. 646, 648 (Fla. 1936) (internal quotation marks
omitted). Thus, “only after the liens have been satisfied may any surplus
be disbursed to the owner of the equity of redemption.” Gen. Bank, F.S.B.
v. Westbrooke Pointe, Inc., 548 So. 2d 736, 736 (Fla. 3d DCA 1989).

In other words, “[t]he lien of the junior mortgage is not extinguished in
the foreclosure but is instead transferred from the property to the fund
that stands in the place of the property.” Household Fin. Servs., Inc. v.
Bank of Am., N.A., 883 So. 2d 346, 348 (Fla. 4th DCA 2004). In Household
Finance, we held that “a junior mortgagee, joined as a defendant in a
foreclosure action and against whom a default has been entered, may later
claim entitlement to the surplus funds remaining after a foreclosure sale.”
Id. at 347.

Distributions of surplus funds are not made based on vague notions of
fairness, but according to the procedure set forth in sections 45.031(1) and
45.032. For example, a trial court may not disburse “surplus proceeds
from a foreclosure sale to the buyer to use to satisfy subordinate
lienholders who were not parties to the foreclosure action.” Rodriguez v.
Fed. Nat’l Mortg. Ass’n, 220 So. 3d 577, 577 (Fla. 5th DCA 2017). As the
Fifth District explained: “The notice of lis pendens recorded in this case
reflects that the Rodriguezes owned the subject property. No subordinate
lienholders were shown on the face of the complaint.” Id. at 578. Because
the buyer was not an “owner of record,” an assignee of the owner, or a
“subordinate lienholder,” the buyer “was not entitled to benefit from the
surplus funds.” Id. Rather, “the application of the statute is clear—the
owner of record at the time of the recording of the lis pendens is entitled
to any surplus proceeds.” Id.

Even if a subordinate lienholder is a party to the foreclosure action who
asserted a claim to surplus funds in a pleading, the subordinate lienholder
must still timely file a claim with the clerk after a foreclosure sale to
preserve its claim to the surplus. See Mathews v. Branch Banking & Tr.

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Co., 139 So. 3d 498, 500 (Fla. 2d DCA 2014). In Mathews, the Second
District held that a subordinate lienholder’s “answer and affirmative
defense” to a foreclosure complaint did not satisfy the “requirement that
the party file a claim with the clerk after the sale of the property.” Id.

This Case

We are required to construe the language in sections 45.031 and
45.032. “In interpreting a statute, our task is to give effect to the words
that the legislature has employed in the statutory text.” Lab’y Corp. of Am.
v. Davis, 339 So. 3d 318, 323 (Fla. 2022). “The words of a governing text
are of paramount concern, and what they convey, in their context, is what
the text means.” Ham v. Portfolio Recovery Assocs., LLC, 308 So. 3d 942,
946 (Fla. 2020) (quoting Antonin Scalia & Bryan A. Garner, Reading Law:
The Interpretation of Legal Texts 56 (2012)). “Under the whole-text canon,
proper interpretation requires consideration of the entire text, in view of
its structure and of the physical and logical relation of its many parts.”
Davis, 339 So. 3d at 324 (internal quotation marks omitted).

The trial court correctly limited the City’s entitlement to surplus funds
solely to the original $671.01 lien referenced in the pleadings. Section
45.032(1)(b) defines “subordinate lienholder” as “the holder of a
subordinate lien shown on the face of the pleadings as an encumbrance on
the property.” § 45.032(1)(b), Fla. Stat. (2024) (emphasis added). The City
meets the definition of a “subordinate lienholder” only as to the single
$671.01 lien identified in the foreclosure complaint in 2011 and admitted
in the City’s answer; that lien appears “on the face” of both pleadings
within the meaning of the statute. The City does not fall under the
definition of a “subordinate lienholder” as to the $1,712,200 in code
enforcement liens recorded between 2014 and 2023, which were unrelated
to the original utilities lien filed prior to the notice of lis pendens. The City
is attempting to bootstrap a single pleaded subordinate lien into a claim
for surplus funds based on subsequent, post-judgment liens not shown
on the face of the pleadings.

Under the whole-text canon, the reference to “claim” in subsection
48.032(2), which grants priority over surplus funds to “subordinate
lienholders who have timely filed a claim,” must be read together with the
definitional limitation of a “subordinate lienholder” set forth in subsection
(1)(b). Thus, a “claim” under subsection (2) can mean only a claim asserted
by a subordinate lienholder in their capacity as “a holder of a subordinate
lien shown on the face of the pleadings as an encumbrance on the
property.” See §§ 48.032(1)(b), (2), Fla. Stat. (2024). Put simply, the term
“claim” in subsection (2) necessarily refers to a subordinate lienholder’s

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claim for surplus funds with respect to a subordinate lien shown on the
face of the pleadings. See id. Because the City’s subsequently-recorded
code enforcement liens do not appear on the face of the pleadings, the City
is not a “subordinate lienholder” with respect to its claim for $1,712,200
in code violations that were not identified in the pleadings as an
encumbrance on the property.

The City’s reliance on cases like Mathews and Household Finance is
misplaced because those cases merely establish that a subordinate
lienholder’s claim for surplus funds must be timely made after the
foreclosure sale, irrespective of whether any claim for such was made in
the responsive pleading. Those cases addressed procedural issues
concerning when a claim for surplus funds needed to be asserted, not the
substantive issue of whether a foreclosure defendant named as a
subordinate lienholder could assert a claim to surplus funds based on
after-acquired liens not shown on the face of the pleadings.

The City also argues that section 48.23, Florida Statutes—the lis
pendens statute—does not bar its claims because it is a party to the
foreclosure action. But this argument ignores that the disbursement of
surplus funds is governed by section 45.032, which limits the statutory
definition of a “subordinate lienholder” to “the holder of a subordinate lien
shown on the face of the pleadings as an encumbrance on the property.”
§ 45.032(1)(b), Fla. Stat. (2024).

The City had other options available to preserve its ability to receive the
surplus funds during the pendency of the lengthy foreclosure process. The
inability to qualify as a “subordinate lienholder” under section 45.032 as
to the code enforcement liens would not have precluded the City from
pursuing other collection remedies, but those options are not now before
us. See, e.g., § 162.09, Fla. Stat. (2024). The City chose not to do so,
opting instead to rely on the strategy of bootstrapping the subsequently-
recorded liens onto the initial lien referenced in the pleadings. Although
we agree that this strategy may have been a cleaner and more efficient
process to secure the surplus proceeds, it did not comply with the
language of the statute.

Affirmed.

KLINGENSMITH, J., concurs.
MAY, J., dissents with opinion.

MAY, J., dissenting.

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I disagree with the majority’s reading of the pertinent statute and
therefore dissent from the majority’s decision. The issue here is whether
a subordinate lienholder in a foreclosure action is limited to liens in
existence when the foreclosure complaint and lis pendens are filed when
making a claim against surplus funds from the foreclosure sale. By its
decision, the majority answers the question in the affirmative. I disagree
because nothing in section 45.032(1)(b) dictates that result. Rather,
subsection (3) defines “who” a subordinate lienholder is. It’s as simple as
that.

Section 45.032(1)(b) defines a subordinate lienholder as: “the holder of
a subordinate lien shown on the face of the pleadings as an encumbrance
on the property.” § 43.032(3)(b), Fla. Stat. (2012). It is important to note
that section 45.032(3) defines “who” is a subordinate lienholder. The
statute does NOT define “what” or “how much” the subordinate lienholder
may claim against surplus funds after the foreclosure sale.

The face of the foreclosure complaint alleged in paragraph 11 that:

Defendant, HALLANDALE BEACH CITY, may claim to have
some right or interest in the subject real property arising out
of, including but not limited to, a LIEN recorded in Official
Records Book 47359 Page 474 of the Public Records of
BROWARD County, Florida. However, any right or interest of
said Defendant is subject to and inferior to the right and
interest of Plaintiff.

(Emphasis added). And, in fact, at the time the bank filed the foreclosure
petition, the City of Hallandale Beach (“City”) had recorded a $671.01 lien
on page 474 of the Broward County Public Records.

The City answered the foreclosure complaint and asserted “that if there
are proceeds from the sale remaining after satisfying the debt owed to the
Plaintiff, then the Court should order the City’s liens satisfied with such
proceeds.” (Emphasis added). The City did not limit its request to liens in
existence at that time.

Indeed, the final foreclosure judgment entered in 2012 included the
following language:

IF YOU ARE A SUBORDINATE LIENHOLDER CLAIMING A
RIGHT TO FUNDS REMAINING AFTER THE SALE, YOU MUST
FILE A CLAIM WITH THE CLERK NO LATER THAN 60 DAYS

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AFTER THE SALE. IF YOU FAIL TO FILE A CLAIM, YOU WILL
NOT BE ENTITLED TO ANY REMAINING FUNDS.

That notice also failed to limit the subordinate lienholder to an existing
lien.

For the next thirteen years, the property owner managed to delay the
property’s sale, filing numerous motions and nine suggestions of
bankruptcy. An initial foreclosure sale took place in 2017. At that time,
the City filed a $2,842.37 claim, based on then-existing liens, against the
surplus funds, an amount greater than the lien identified in the
foreclosure complaint, reflecting additional liens recorded after the
foreclosure judgment. The trial court vacated that foreclosure sale.

Fast forward to 2023, the bank moved to amend the final foreclosure
judgment to include additional expenses incurred since entry of the final
foreclosure judgment. The trial court granted the motion and amended
the final judgment to include additional expenses incurred by the bank. A
second foreclosure sale took place in August 2024. By that time, the City
had recorded more liens that accrued during the twelve years the property
owner managed to delay the property’s foreclosure sale.

The City, a subordinate lienholder as defined by section 45.032(3), as
“shown on the face of the pleadings,” filed a claim against the surplus
funds, as it was entitled to do. But, the trial court, and now this Court,
restricts the City to the amount of the recorded lien in existence when the
foreclosure petition was filed, notwithstanding that twelve years had
elapsed and subsequent liens had been properly recorded.

The majority reads into section 45.032(1)(b) a “limitation on the
amount” a subordinate lienholder may claim on surplus funds. But I can
find no such monetary limitation in the statute’s plain wording. All the
statute requires is that the subordinate lienholder be shown on the face of
the pleadings. Tellingly, the foreclosure petition’s allegations recognized
that the City as subordinate lienholder possessed a recorded lien, but also
recognized the City was not limited to the identified recorded lien
(“including but not limited to”).

Section 162.09(3), Florida Statutes, provides for the recording of a
certified copy of an order imposing a fine and further provides that it
“constitute[s] a lien against the land on which the violation exists. . . .”
Section 695.01(3) provides that:

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[a] lien by a governmental entity or quasi-governmental entity
that attaches to real property for an improvement, service,
fine, or penalty, other than a lien for taxes, non-ad valorem or
special assessments, or utilities, is valid and effectual in law
or equity against creditors or subsequent purchasers for a
valuable consideration only if the lien is recorded in the official
records of the county in which the property is located.

§ 695.01(3), Fla. Stat. (2024). The City duly recorded its liens both before
the foreclosure petition was filed and after the foreclosure judgment was
entered.

The City could not record liens until they accrued and could not place
a claim against surplus funds until the sale took place. The City’s ability
to place a claim against the surplus funds did not occur for twelve long
years following the judgment, during which additional liens were duly
recorded. As Judge Warner wrote in Household Finance Services, Inc. v.
Bank of America, N.A., 883 So. 2d 346, 348 (Fla. 4th DCA 2004):

In determining who is entitled to surplus funds in a mortgage
foreclosure, the general rule is that all encumbrances on
mortgaged premises inferior to the mortgage on which the sale
is based must be paid in order of time in which they
respectively became liens, unless some equitable right
demands a different order of payment. . . . The lien of the
junior mortgage is not extinguished in the foreclosure but is
instead transferred from the property to the fund that stands
in the place of the property.

(Citation modified). Here, the City’s liens should be paid in the order in
which they became recorded liens, notwithstanding that they accrued
between the foreclosure judgment and the sale.

The majority cannot point to a case or statute other than its restrictive
reading of section 45.032(1)(b) that confines the City’s claim to surplus
funds to the liens that existed at the time the bank filed its foreclosure
petition and lis pendens. 2 In the absence of such authority, I see no reason
to limit the City’s ability to claim the amount of its accrued liens in

2 It makes no sense to limit the City to the $671.01 utility lien in existence at the

time of the foreclosure. The utility liens had all been resolved by the time the
property was sold. The recorded code enforcement liens remained outstanding.
And availability of other options for the City doesn’t negate its ability to place a
claim on surplus funds.

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existence at the time of the sale, especially since they accrued while the
property owner used every option available to delay the foreclosure sale for
twelve years.

Bottom line: section 45.032(1)(b) defines “who” a subordinate lienholder
is but does not define “what” that subordinate lienholder may claim
against surplus funds.

I therefore dissent and would reverse.

* * *

Not final until disposition of timely-filed motion for rehearing.

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