Maryland Rules, Title 14 - Sales of Property, Chapter 200 - Foreclosure of Lien Instruments

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Maryland Rules/MARYLAND RULES /Title 14. Sales of Property /Chapter 200. Foreclosure of Lien Instruments
Chapter 200. Foreclosure of Lien Instruments
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Maryland Rules/MARYLAND RULES /Title 14. Sales of Property /Chapter 200. Foreclosure of Lien
Instruments /Rule 14-201. Scope and definitions.
Rule 14-201. Scope and definitions.
(a) Scope.- The rules in this Chapter apply to foreclosure of liens upon property that are created or
authorized to be created by a lien instrument or are created by a statute providing for foreclosure in the
manner specified for foreclosure of mortgages. The procedure set forth in these Rules shall provide the
sole remedy for the vendor for repossession of property sold under a land installment contract executed
pursuant to Code, Real Property Article, Title 10, Subtitle 1 or its statutory predecessor. Otherwise, the
foreclosure procedure provided in these Rules does not preclude other remedies, including but not
limited to self-help, that may be available under Code, Commercial Law Article; Code, Real Property
Article; or other law.
(b) Definitions.- The following definitions apply in the rules in this Chapter:
(1) Assent to a decree.- "Assent to a decree" means a provision in a lien instrument declaring an assent
to the entry of an order for the sale of the property subject to the lien upon a specified default.
(2) Debt.- "Debt" means a monetary obligation secured by a lien.
(3) Debtor.- "Debtor" means the record owner of the property at the time the lien was created and the
purchaser under a land installment contract.
(4) Lien.- "Lien" means a statutory lien or a lien upon property created or authorized to be created by a
lien instrument.
(5) Lien instrument.- "Lien instrument" means a mortgage, a deed of trust, a land installment contract,
including those defined in Code, Real Property Article § 10-101 (b), a contract creating a lien pursuant
to Code, Real Property Article, §§ 14-201 through 14-205, a deed or other instrument reserving a
vendor's lien, an instrument creating or authorizing the creation of a lien in favor of a homeowners'
association, a condominium council of unit owners, a property owners' association or a community
association, a security agreement, and any other instrument creating or authorizing the creation of a lien
upon the property.
(6) Power of sale.- "Power of sale" means a provision in a lien instrument authorizing a person to sell
the property upon a specified default.
(7) Property.- "Property" means real and personal property of any kind situated within this State.
(8) Record owner of property.- "Record owner of property" includes the record holder of the rights of a
purchaser under a land installment contract.
(9) Sale.- "Sale" means foreclosure sale.
(10) Secured party.- "Secured party" means a mortgagee, the holder of a note secured by a deed of trust,
a vendor holding a vendor's lien, a condominium council of unit owners, a homeowners' association, a
property owners' or community association, and any other party secured by a lien. "Secured party"
includes any assignee or successor in interest of a secured party.
(11) Statutory lien.- "Statutory lien" means a lien on property created by a statute providing for
foreclosure in the manner specified for the foreclosure of mortgages.
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Instruments /Rule 14-202. Parties.
Rule 14-202. Parties.
(a) Who may institute action.-
(1) Under power of sale.- When the lien instrument contains a power of sale or when a statute provides
that a lien may be foreclosed as if it contained a power of sale, an action to foreclose the lien may be
instituted by any natural person authorized to exercise the power of sale, except that an action to
foreclose a deed of trust shall be instituted by any trustee appointed in the deed or any successor trustee.
(2) Under assent to decree.- When the lien instrument contains an assent to a decree or when a statute
provides that a lien shall be foreclosed as if it contained an assent to a decree, an action to foreclose the
lien may be instituted by the secured party, except that an action to foreclose a deed of trust shall be
instituted by the beneficiary of the deed of trust, any trustee appointed in the deed, or any successor
trustee.
(b) Action by fractional owners of debt secured by a lien.-
(1) Minimum of 25% must be represented.- A power of sale shall not be exercised, and the court shall
not enter an order for a sale under an assent to a decree, unless the power is exercised or application for
an order is made or consented to by the holders of not less than 25% of the entire debt due under the lien
instrument.
(2) Exclusive right to foreclose.- Subject to the provisions of section (b) of Rule 14-207, the first party
instituting an action to foreclose a lien instrument containing either a power of sale or an assent to a
decree, thereby acquires the exclusive right to foreclose the lien.
(c) Exceptions - Deed of trust.- The provisions of subsection (b) (1) of this Rule shall not apply in an
action to foreclose a deed of trust.
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Instruments /Rule 14-203. Conditions precedent; venue.
Rule 14-203. Conditions precedent; venue.
(a) Conditions precedent.-
(1) Generally.- An action to foreclose a lien may be filed after (A) the instrument creating or giving
notice of the existence of the lien has been filed for record, and (B) there has been a default in a
condition upon which the lien instrument provides that a sale may be made or there is a default in the
payment of the debt secured by a statutory lien.
Cross References.
Code, Real Property Article, §§ 14-201 through 14-206.
(2) Land installment contract.- An action to foreclose a land installment contract as defined in Code,
Real Property Article, § 10-101 (b) shall be instituted only after the secured party: (A) serves on the
debtor and the current record owner of the property, either by delivery to the person to be served or by
certified mail to the last known address of the person to be served, a written notice stating the amount of
payment in default and the nature of any claimed default in any other condition or requirement of the
contract, and advising the person served that foreclosure proceedings will be instituted on or after a
designated day, not less than 30 days after service of the notice, unless the debtor or the current record
owner before that time cures the default, and (B) files proof by affidavit that the required notice has
been given.
(b) Venue.- An action to foreclose a lien shall be filed in the county in which all or any part of the
property subject to the lien is located.
(c) Jurisdiction - Attaches upon commencement of action.- The jurisdiction of the court over property
subject to a lien shall attach upon the commencement of an action filed pursuant to Rule 14-204, with or
without the bond described in Rule 14-206 (a).
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Instruments /Rule 14-204. Commencement of action and process.
Rule 14-204. Commencement of action and process.
(a) Methods of commencing action.- An action to foreclose a lien pursuant to a power of sale shall be
commenced by filing an order to docket. An action to foreclose a lien pursuant to an assent to a decree
or where the lien instrument contains neither a power of sale nor an assent to a decree shall be
commenced by filing a complaint to foreclose. When a lien instrument contains both a power of sale and
an assent to a decree, the lien may be foreclosed pursuant to either the power of sale or the assent to a
decree. The complaint or order to docket shall be accompanied by:
(1) the original or a certified copy of the lien instrument or, in an action to foreclose a statutory lien, an
original or a certified copy of a notice of the existence of the lien,
(2) a statement of the debt remaining due and payable supported by an affidavit of the plaintiff or the
secured party or the agent or attorney of the plaintiff or the secured party,
(3) in the case of a deed of trust, a copy of the debt instrument certified by the attorney or the trustee
conducting the sale, and
(4) if any defendant is a natural person, an affidavit that either the person is not in the military service of
the United States as defined in Section 511 of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, 50 U.S.C. Appendix, 520, or that the action is authorized by the Act.
(b) Notice to record owner of residential real property.- The person authorized to make a sale shall
comply with the notice requirement contained in Code, Real Property Article, §7-105 (a-1) and, at any
time before the sale is ratified, shall file an affidavit in the proceedings that the notice requirement has
been satisfied.
(c) Process and hearing not required.- In an action to foreclose a lien pursuant to a power of sale or
pursuant to an order for sale under an assent to a decree, it is not necessary that process issue or that a
hearing be held prior to sale.
[Amended Jan. 10, 2006; effective Jan. 10, 2006.]
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Instruments /Rule 14-205. Lien instruments or statutory liens - Containing neither power of sale nor assent to
decree.
Rule 14-205. Lien instruments or statutory liens - Containing neither power of sale nor assent to
decree.
(a) Commencement of action and process.- When a complaint to foreclose a lien instrument or statutory
lien containing neither a power of sale nor an assent to a decree is filed, process shall issue and be
served, and the action shall proceed as in any other civil action.
(b) Notice to record owner of residential real property.- The plaintiff shall comply with the notice
requirement contained in Code, Real Property Article, §7-105 (a-1) and, at any time before the sale is
ratified, shall file an affidavit in the proceedings that the notice requirement has been satisfied.
(c) Order of court directing sale - Conditions.-
(1) Generally.- In an action to foreclose a lien instrument or statutory lien containing neither a power of
sale nor an assent to a decree, the court shall first determine whether a default has occurred. If the court
finds that a default has occurred it shall (A) fix the amount of the debt, interest, and costs then due and
(B) provide a reasonable time within which payment may be made. The court may order that if payment
is not made within the time fixed in the order, so much of the property as may be necessary to satisfy the
amount due shall be sold.
(2) Order directing sale before judgment in exceptional case.- If after a hearing the court is satisfied that
the interests of justice require an immediate sale of the property that is subject to the lien, and that a sale
would be ordered as a result of the final hearing of the action, the court may order a sale of the property
before judgment and shall appoint a person to make the sale pursuant to Rule 14-207. The court shall
order the proceeds of any sale before judgment to be deposited or invested pending distribution pursuant
to judgment.
[Amended Jan. 10, 2006; effective Jan. 10, 2006.]
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Instruments /Rule 14-206. Procedure prior to sale.
Rule 14-206. Procedure prior to sale.
(a) Bond.- Before making a sale of property to foreclose a lien, the person authorized to make the sale
shall file a bond to the State of Maryland conditioned upon compliance with any court order that may be
entered in relation to the sale of the property or distribution of the proceeds of the sale. Unless the court
orders otherwise, the amount of the bond shall be the amount of the debt plus the estimated expenses of
the proceeding. On application by a person having an interest in the property or by the person authorized
to make the sale, the court may increase or decrease the amount of the bond pursuant to Rule 1-402 (d).
(b) Notice.-
(1) By publication.- After commencement of an action to foreclose a lien and before making a sale of
the property subject to the lien, the person authorized to make the sale shall publish notice of the time,
place, and terms of sale in a newspaper of general circulation in the county in which the action is
pending. "Newspaper of general circulation" means a newspaper satisfying the criteria set forth in
Code, Article 1, Section 28. A newspaper circulating to a substantial number of subscribers in a county
and customarily containing legal notices with respect to property in the county shall be regarded as a
newspaper of general circulation in the county, notwithstanding that (1) its readership is not uniform
throughout the county, or (2) its content is not directed at all segments of the population. For the sale of
an interest in real property, the notice shall be given at least once a week for three successive weeks, the
first publication to be not less than 15 days prior to sale and the last publication to be not more than one
week prior to sale. For the sale of personal property, the notice shall be given not less than five days nor
more than 12 days before the sale.
(2) By certified and first class mail.-
(A) Before making a sale of the property, the person authorized to make the sale shall send notice of the
time, place, and terms of sale by certified mail and by first class mail to the last known address of (i) the
debtor, (ii) the record owner of the property, and (iii) the holder of any subordinate interest in the
property subject to the lien.
(B) The notice of the sale shall be sent not more than 30 days and not less than ten days before the date
of the sale to all such persons whose identity and address are actually known to the person authorized to
make the sale or are reasonably ascertainable from a document recorded, indexed, and available for
public inspection 30 days before the date of the sale.
(3) To counties or municipal corporations.- In addition to any other required notice, not less than 15
days prior to the sale of the property, the person authorized to make the sale shall send written notice to
the county or municipal corporation where the property subject to the lien is located as to:
(A) the name, address, and telephone number of the person authorized to make the sale; and
(B) the time, place, and terms of sale.
(4) Other notice.- If the person authorized to make the sale receives actual notice at any time before the
sale is held that there is a person holding a subordinate interest in the property and if the interest holder's
identity and address are reasonably ascertainable, the person authorized to make the sale shall give
notice of the time, place, and terms of sale to the interest holder as promptly as reasonably practicable in
any manner, including by telephone or electronic transmission, that is reasonably calculated to apprise
the interest holder of the sale. This notice need not be given to anyone to whom notice was sent pursuant
to subsection (b) (2) of this Rule.
(5) Return receipt or affidavit.- The person giving notice pursuant to subsections (b) (2), (b) (3), and (b)
(4) of this Rule shall file in the proceedings an affidavit (A) that the person has complied with the
provisions of those subsections or (B) that the identity or address of the debtor, record owner, or holder
of a subordinate interest is not reasonably ascertainable. If the affidavit states that an identity or address
is not reasonably ascertainable, the affidavit shall state in detail the reasonable, good faith efforts that
were made to ascertain the identity or address. If notice was given pursuant to subsection (b) (4), the
affidavit shall state the date, manner, and content of the notice given.
(c) Postponement.- If the sale is postponed, notice of the new date of sale shall be published in
accordance with subsection (b) (1) of this Rule. No new or additional notice under subsection (b) (2) or
(b) (3) of this Rule need be given to any person to whom notice of the earlier date of sale was sent, but
notice shall be sent to persons entitled to notice under subsections (b) (2) (B) and (4) of this Rule to
whom notice of the earlier date of sale was not sent.
[Amended Nov. 12, 2003, effective Jan. 1, 2004; amended Nov. 8, 2005, effective Jan. 1, 2006;
amended Jan. 10, 2006; effective Jan. 10, 2006.]
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Instruments /Rule 14-207. Sale.
Rule 14-207. Sale.
(a) Place of sale.- Unless the court, for good cause, orders otherwise (1) a sale shall be made in the
county in which the property subject to the lien is located; and (2) when property is located in more than
one county, the sale shall be made in the county in which the action is pending.
Cross References.
Rule 14-101.
(b) Person authorized to sell.-
(1) Under power of sale.- A sale of property pursuant to a power of sale shall be made by a natural
person who is either the secured party, if the secured party is granted that authority by the lien
instrument, or any other natural person designated by name in the lien instrument to exercise the power
of sale, except that a sale of property subject to a deed of trust shall be made by the trustee appointed in
the deed or a successor trustee. The trustee shall be a natural person.
(2) Under assent to a decree.- A sale of property pursuant to an assent to a decree shall be made by a
trustee or by a substituted trustee appointed by the court to make the sale. The trustee shall be a natural
person.
(c) Terms of payment.-
(1) Under power of sale.- A sale of property under a power of sale shall be made upon the terms as to
payment provided in the lien instrument. If no terms as to payment are provided in the lien instrument or
the sale is made pursuant to a statutory lien, the sale shall be made upon terms that are reasonable under
the circumstances.
(2) Under assent to a decree.- A sale of property under an order of court entered pursuant to an assent to
a decree shall be made upon the terms as to payment provided in the order.
(d) Procedure following sale.- The procedure following a sale made pursuant to this Rule shall be as
provided in Rules 14-305 and 14-306, except that an audit is mandatory.
(e) Resale - Who may conduct.- If a sale is set aside by the court, the court may order that the property
be resold by the person who made the previous sale, or by a special trustee appointed by the court.
(f) Conveyance to purchaser.-
(1) When made.- After a sale has been finally ratified by the court and the purchase money paid, the
person making the sale shall convey the property to the purchaser or the purchaser's assignee. If
conveyance is to the purchaser's assignee, the purchaser shall join in the deed.
(2) Under power of sale - Where vendor and purchaser are the same.- If the vendor and purchaser at a
sale made pursuant to a power of sale are the same person, in the order of ratification the court shall
appoint a trustee to convey the property to the purchaser on the payment of the purchase money. The
trustee need not furnish bond unless the court so provides in its order.
(3) To substituted purchaser.- At any time after sale and before conveyance, the court, upon ex parte
application and consent of the purchaser, substituted purchaser, and person making the sale, may
authorize the conveyance to be made to a substituted purchaser.
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Instruments /Rule 14-208. Proceeds of sale.
Rule 14-208. Proceeds of sale.
(a) Distribution of surplus.- At any time after a sale of property pursuant to Rule 14-207 and before the
final ratification of the auditor's account, any person claiming an interest in the property or in the
proceeds of the sale of the property may file with the court an application for the payment of that
person's claim from the surplus proceeds of the sale. The court shall order distribution of the surplus
equitably among the claimants.
(b) Insufficiency of proceeds - Deficiency judgment.- At any time within three years after the final
ratification of the auditor's report, a secured party or any party in interest entitled under the covenants of
the lien instrument to maintain an action for a deficiency judgment may file a motion for a deficiency
judgment if the net proceeds (after deducting the costs and expenses allowed by the court) of sale of the
entire property subject to the lien are insufficient to satisfy the debt and accrued interest. After notice of
the motion has been given in the manner provided by Rule 2-121, the court may enter a judgment in
personam for the amount of the deficiency against the party to the action who is liable for payment.
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Instruments /Rule 14-209. Release and assignment - Stay - Insolvency.
Rule 14-209. Release and assignment - Stay - Insolvency.
(a) Release or assignment of claim.- A person entitled to release or assign a claim under a lien may file
in the pending action to foreclose the lien a written release or assignment of the claim and of any order
for the sale of the property entered in the action. The release or assignment shall be signed and
acknowledged before a person authorized to take acknowledgments of deeds. The release or assignment
shall take effect at the time of entry upon the docket and shall thereupon be effective to discharge the
property from the lien or to assign the claim.
(b) Injunction to stay foreclosure.-
(1) Motion.- The debtor, any party to the lien instrument, or any person who claims under the debtor a
right to or interest in the property that is subordinate to the lien being foreclosed, may file a motion for
an injunction to stay any sale or any proceedings after a sale under these rules. The motion shall not be
granted unless the motion is supported by affidavit as to all facts asserted and contains: (1) a statement
as to whether the moving party admits any amount of the debt to be due and payable as of the date the
motion is filed, (2) if an amount is admitted, a statement that the moving party has paid the amount into
court with the filing of the motion, and (3) a detailed statement of facts, showing that: (A) the debt and
all interest due thereon have been fully paid, or (B) there is no default, or (C) fraud was used by the
secured party, or with the secured party's knowledge, in obtaining the lien.
(2) Injunction based on misrepresentation.- If the court finds that an injunction to stay an action to
foreclose a lien was obtained through misrepresentation, it shall order the person who obtained the
injunction to pay to the secured party interest on the amount of the debt at the rate of five percentage
points over the rate otherwise payable in connection with the debt from the time of the grant of the
injunction until its dissolution. This remedy is in addition to any other remedy that may be available.
(c) Insolvency proceeding - Effect on foreclosure.- When property of an insolvent is subject to a lien,
the institution of or pendency of insolvency proceedings by or against the insolvent under the laws of
this State, shall not stay a sale of property pursuant to a foreclosure action instituted prior to the
insolvency proceeding.
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Instruments /Rule 14-210. Deed of trust - Removal of trustee.
Rule 14-210. Deed of trust - Removal of trustee.
(a) Inapplicable where procedure set forth in lien instrument.- The procedure for removal of a trustee
under a deed of trust set forth in this Rule shall not supersede or nullify any procedure for the removal
or substitution of a trustee that may be provided for in the deed of trust.
(b) Motion to remove trustee.- When a trustee who has the right to institute a foreclosure action fails or
refuses to do so, or if there exists any other good and sufficient reason for the removal of the trustee
under a deed of trust, secured parties holding not less than 25%, or any lesser percentage provided in the
deed of trust, of the beneficial interest under the deed of trust may file a motion for the removal of the
trustee and appointment of a new trustee. The motion shall be supported by affidavit and shall contain
facts showing the failure or refusal to foreclose or any other reason for removal alleged to exist. The
motion may be filed in any court in which the action to foreclose may be instituted.
(c) Notice to trustee.- Notice of the filing of the motion shall be given to the trustee by mailing a copy
of the motion by certified mail to the last known address of the trustee, unless the court orders
otherwise.

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Document 1 of 11

Chapter 200. Foreclosure of Lien Instruments

Rule 14-201. Scope and definitions.

(2) Debt.- "Debt" means a monetary obligation secured by a lien.

(9) Sale.- "Sale" means foreclosure sale.

Rule 14-202. Parties.

(a) Who may institute action.-

(b) Action by fractional owners of debt secured by a lien.-

Rule 14-203. Conditions precedent; venue.

(a) Conditions precedent.-

Code, Real Property Article, §§ 14-201 through 14-206.

Rule 14-204. Commencement of action and process.

[Amended Jan. 10, 2006; effective Jan. 10, 2006.]

(c) Order of court directing sale - Conditions.-

[Amended Jan. 10, 2006; effective Jan. 10, 2006.]

Rule 14-206. Procedure prior to sale.

(2) By certified and first class mail.-

(B) the time, place, and terms of sale.

Rule 14-207. Sale.

(b) Person authorized to sell.-

(c) Terms of payment.-

(f) Conveyance to purchaser.-

Rule 14-208. Proceeds of sale.

Rule 14-209. Release and assignment - Stay - Insolvency.

(b) Injunction to stay foreclosure.-

Rule 14-210. Deed of trust - Removal of trustee.

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