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More On The New Law Limiting The Basis For Lien Foreclosure

I have received some questions regarding the new law, which took effect on October 1, 2013, that limits the basis for foreclosure of a lien on a condominium unit by the council of unit owners and foreclosure of a lien on a property by a homeowners association.  The new law  modifies Section 14-204 of the Real Property Article of the Maryland Annotated Code to prohibit condominiums and homeowners associations from foreclosing on liens for anything other than delinquent periodic or special assessments; meaning that unpaid fines may not be the basis for a lien foreclosure.  Additionally, the new law requires that related costs and fees be limited to “reasonable costs and attorney’s fees directly related to the filing of the lien and not exceeding the amount of the delinquent assessments.”  Unpaid fines and other charges may still form the basis of a lien, but the lien may not be foreclosed on the basis.

Both the Maryland Senate and House of Delegates passed similar bills, but the House version had included cooperative housing corporations within the scope of the legislation.  The bills were reconciled in committee, with cooperatives being eliminated in accordance with the Senate version.  Late amendments added “reasonable costs,” and provided that costs and fees not exceed the amount of the principal amount of the unpaid assessment.  The legislation expressly provides that these provisions do not preclude the use of other means to enforce a lien other than foreclosure.  Accordingly, suits for money judgments can still be pursued.  The Governor signed the bill on May 16, 2013.  The law expressly provides that it is “to apply only prospectively and may not be applied or interpreted to have any effect on or application to any lien filed before the effective date.”