Bulletin: MD2015001

Date:
January 12, 2015
To:
All Maryland Issuing Offices
RE:
UNDERWRITING - Maryland "Super-Priority" Liens for HOA and Condo Association Dues in a Foreclosure

Dear Associates:

This Bulletin does not supersede any prior Maryland Bulletin.

Title insurance professionals who review or insure post-foreclosure transactions should be aware that Maryland provides "super-priority" lien status for homeowner’s association (HOA) and/or condominium liens in the context of foreclosures of mortgages or deeds of trust. In other words, in the event of a foreclosure, certain charges resulting from an HOA or condominium lien are considered to be valid (i.e., due and payable), despite the fact that they are recorded after the foreclosed instrument, and would otherwise be wiped out as subordinate liens.

1. CONDOMINUM SUPER-PRIORITY LIEN:

MD Real Property §11–110(f)(2) and §11–110(f)(3) state that, in the event of a foreclosure of a mortgage or deed of trust on a condominium unit, a portion of a condominium’s liens against the unit shall have priority over  any  mortgage or deed of trust that is recorded against the unit on or after October 1, 2011. This amount includes up to four months, or a maximum of $1,200.00, of:

"… unpaid regular assessments for common expenses that are levied by the condominium association in accordance with the requirements of the declaration of bylaws of the condominium."

In short, four months of regular condominium dues, or $1,200.00, whichever is the lesser amount, must be paid to the condominium association.

The four month/$1,200.00 amount does not include:

  • Interest;
  • Costs of collection;
  • Late charges;
  • Fines;
  • Attorney’s fees;
  • Special assessments; or
  • Any other costs or sums due under the declaration or bylaws of the condominium or as provided under any contract, law, or court order. §11–110(f)(3).

2. HOA SUPER-PRIORITY LIEN:

MD Real Property §11B-117(c)(2) and  §11B-117(c)(3) includes identical provisions to those found in MD Real Property §11–110(f)(2) and §11–110(f)(3), except that they apply to HOA dues instead of condominium association dues. The lien priority is for 4 months of regular HOA dues, or $1,200.00, whichever is less.

3. ADDITIONAL INFORMATION:

Both of these statutes require the governing body of the condominium or homeowner’s association to provide the holder of a mortgage or deed of trust, upon request, with written information about the portion of any lien that may have priority over the foreclosed mortgage or deed of trust. If they fail to respond, the HOA or condominium lien will lose its priority over the foreclosed instrument.

Please consult with a Maryland Underwriter if you require additional information about the contents of this Bulletin.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None