In the case of In re Walker, 473 Md. 68 (2021), the Court of Appeals responded to a certified question of law by the U.S. Bankruptcy Court for the District of Maryland (Bankruptcy Court) by stating that a lien under the Maryland Contract Lien Act (MCLA) cannot secure damages, costs of collection, late charges, and attorney's fees that accrue subsequent to the recordation of the lien.
The Court of Appeal’s decision was based on the language of the MCLA, Real Property Article (RP) §§14-201 et seq., and the purpose of the MCLA. The Court found that the enumeration of items in RP §§14-202(b) and RP §§14-204(d)(2) for which a lien may attach only includes damages for already delinquent assessments, costs of collection, late charges and costs and attorneys’ fees in filing the lien, and does not include future damages to an association.
More importantly, the Court held that the presence of a continuing lien that includes subsequently arising assessments and charges would be inconsistent with the purpose and history of the MCLA. The MCLA requires that a landowner be given notice and an opportunity to oppose the creation of a lien in order to satisfy due process requirements. If a community association could have a continuing lien that would apply to future assessments and charges, the property owner would not have the ability to challenge the lien before it came into existence.
In the case at hand, Denise Walker owned a condominium unit in Columbia. She failed to pay her assessments numerous times, and the condominium association filed liens against her eight times. When the association filed a ninth lien, it included a statement that the lien was for the stated amount “plus all sums becoming due thereafter.”
Walker filed for Chapter 13 bankruptcy three times. In the third case she asserted that the MCLA does not permit a lien to secure obligations that accrue after the filing that establishes the lien. The parties submitted a stipulated statement of facts and jointly petitioned the Bankruptcy Court to certify to the Court of Appeals whether a community association's lien perfected under the MCLA can secure unpaid damages, costs of collection, late charges, and attorney’s fees arising under the association’s governing documents that accrue subsequent to the recordation of the lien.
For more information, contact Edward J. Levin.
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