Maryland House Passes Revisions to Contract Lien Act

By a unanimous vote, the Maryland House of Delegates passed HB 628, which amends and clarifies the Maryland Contract Lien Act.  The legislation establishes that a party entitled to enforce a lien may also bring suit for money damages without waiving their rights with respect to the lien, and can bring an action to recover any deficiency after foreclosure, either in the foreclosure proceeding or as a separate suit.

Under 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.

The legislation deletes the above quoted language from Section 14-204(b) of the Maryland Contract Lien Act, and adds  new language stating 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 bill  makes 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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