Legislature Considers Clarifications to Maryland Contract Lien Act

The Maryland General Assembly is considering a bill that would clarify the language of the Maryland Contract Lien Act regarding the right to maintain a suit for monetary damages in addition to foreclosure.  The proposed revisions in House Bill 628 would make clear that a lien holder, including liens for unpaid assessments held by a condominium council of unit owners, could be subject to a monetary suit for damages, even if the lien has not been foreclosed; that such suits for monetary damages may include costs and attorney’s fees; and that, after foreclosure, a suit for monetary judgment could be brought for any deficiency either within the foreclosure proceeding or as a separate suit.

Pursuant to Section 11-110(d) of the Maryland Condominium Act, payments of assessments, along with interest, late charges and attorney’s fees, may be enforced by the council of unit owners against a delinquent unit owner by the imposition of a lien on the unit under the provisions of the Maryland Contract Lien Act.  It further provides that a suit for a money judgment may also be maintained by the Council.  The Maryland Contract Lien Act provides for the imposition of a lien on property as the result of a breach of contract.  In the context of a condominium, the contract at issue is the obligation of each unit owner to pay their allocated share of the common expenses.  Such a lien may be foreclosed in the same manner as mortgages or deeds of trust.  Under the current provisions of Section 14-204(b) of the Maryland Contract Lien Act, “suit for any deficiency following foreclosure may be maintained in the same proceeding,” meaning in the foreclosure proceeding; “and suit for monetary damages may be maintained without waiving any lien securing the same,” meaning that a separate suit for damage does not preclude commencement of a foreclosure proceeding.  However, it has been unclear whether a suit for monetary damages may include costs and attorney’s fees that would be permissible in a foreclosure proceeding.  Moreover, it was unclear whether a suit for monetary damage can be brought after foreclosure.

House Bill 628 would delete the above quoted language from Section 14-204(b) of the Maryland Contract Lien Act.  The proposed new language would provide that the party entitled to enforce the lien “may bring suit for a monetary judgment for the lien amount, plus costs and attorney’s fees, without foreclosing on the property subject to the lien.”  It further would provide that, if the lien has been foreclosed, the person entitled to enforce the lien may “maintain a suit in the foreclosure proceeding for a monetary judgment for any deficiency amount, plus costs and attorney’s fees,” or may “bring a separate suit for a monetary judgment for an deficiency amount, plus costs and attorney’s fees.”  Accordingly, the proposed change would make clear that a suit for money damages for unpaid assessments, along with costs and fees,  can be brought regardless of whether a foreclosure proceeding has been instituted or completed; and, in the event of foreclosure, such a suit can be maintained for any deficiency after foreclosure either in the foreclosure action or as a separate suit.

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