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New Maryland Law Limiting Liens And Related Fees And Charges Takes Effect October 1 — Only Delinquent Assessments Can Form the Basis For A Lien

An amendment to the Maryland Contract Lien Act, as it relates to the foreclosure of liens by condominiums and homeowners associations, takes effect on Tuesday, October 1, 2013.  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.  As a result,  unpaid fines or other charges may not be the basis for a lien.  Additionally, the new law requires that related costs and fees imposed in connection with the lien 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.”  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.”

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.