Campbell v. Council of Unit Owners of Bayside Condominium

THIEME, J. At issue in this case is whether the purchaser of a condominium in a foreclosure sale holds legal title to the property as of the date of the sale, thus rendering her liable for condominium assessments and fees dating from that point. We shall hold that she does, and thus affirm the judgment of the Circuit Court for Queen Anne’s County. Background The facts are not in dispute. 1 Accordingly, the issue presented may be resolved as a matter of law. The circuit court’s ruling is thus subject to de novo review. 600 North Frederick Road, LLC v. Burlington Coat Factory of Maryland, LLC, 419 Md. 413, 432 (2011).

Cf. Heat & Power Corp. v. Air Products & Chemicals, Inc., 320 Md. 584, 590-91 , 578 A.2d 1202 (1990) (de novo review of summary judgment ruling). Appellant Elizabeth Campbell is the owner of the condominium property at 902 Auckland Way in Chester, Maryland (“Property”). The property is a unit -within the Bayside Condominium Regime, and Ms. Campbell became its owner after her successful bid at a trustee’s foreclosure sale conducted on August 3, 2009 by the holder of the deed of trust.

The terms of the trustee’s sale provided in part: TERMS OF SALE: ... Adjustments on all taxes, public charges and special and regular assessments will be made as of the date of the sale and thereafter assumed by the ²⁴³ purchaser. If applicable, condominium and/or homeowner association dues and assessments that may become due after the time of sale will be the responsibility of the purchaser. Title examination, conveyancing, state revenue stamps, transfer taxes, title insurance, and all other costs incident to settlement are to be paid by the purchaser....

The sale was ratified by the circuit court on November 25, 2009, and Ms. Campbell settled on the property on December 28, 2009. The deed was recorded in the land records of Queen Anne’s County on January 7, 2010. Ms. Campbell did not pay the condominium fees that had accrued from the date of the foreclosure sale, but instead paid only those condominium fees due from the date of settlement forward. As a result of her refusal to pay the condominium fees that were due for the interval between the dates of the foreclosure sale and the execution of the deed, counsel for the Council of Unit Owners of Bayside Condominium, the governing body of the condominium regime, sent Ms. Campbell a letter notifying her of Bayside’s intent to create a condominium lien “with the ultimate intent of foreclosing on [her] property.” In its Notice, Bayside claimed ... common expenses of the Condominium applicable to the [Unit] ... for the period August 3, 2009 through February, 2010 totaling $1,552.44, late charges in the amount of $70.00, with interest bearing thereon at the rate of 18% per annum totaling $116.90 as of March 28, 2010, acceleration of condominium assessments through the fiscal year ending December 31, 2010 in the amount of $2,316.90, as well as the cost and expenses of $500.00, which includes reasonable attorneys’ fees ...

On March 9, 2010, Ms. Campbell responded by filing suit in the Circuit Court for Queen Anne’s County pursuant to Section 14-203(e) of the Maryland Contract Lien Act, Md.Code (1974, 2003 Repl.Vol., 2009 Supp.), § 14-203 of the Real Property Article (“Real Prop.”), seeking to “[djeny the lien sought ²⁴⁴ by [Bayside]” and for attorneys fees and costs. 2 The circuit court conducted a hearing on June 28, 2010. On June 28, 2010, the court, Hon. Thomas G. Ross, ruled that, as a matter of law, Ms. Campbell was not entitled to relief. Judge Ross’s Memorandum and Order frames the parties’ respective positions as follows: Campbell’s argument is based upon the By-Laws of Council, specifically the definitions of “owner” and “unit owner.” Owner is essentially any person(s) or entity that “... owns a Condominium Unit ...,” while Unit Owner is one holding “legal title.:” Unit owners are responsible for assessments under the Council’s By-Laws.

Since foreclosure purchasers have equitable title only, Campbell asserts that she is not liable for assessments until after the sale was ratified and the deed recorded. On the other hand, Council notes that foreclosure purchasers are responsible for all assessments after the purchase. The notice of the foreclosure sale identifies the property and, as terms of sale, includes as adjustments after ratification “... all taxes, public charges and special or regular assessments will be made as of the date of sale and thereafter assumed by purchaser [and] [i]f applicable, condominium and/or homeowner association dues and assessments that may become due after the time of sale will be the responsibility of the purchaser.” Council essentially points out that any reliance on § 11-110(c) is misplaced. The sale at issue was a foreclosure ²⁴⁵ sale.

In addition to the published notice of sale, case law supports the proposition that the foreclosure purchaser is liable for all condominium dues and assessments from the date of sale, having acquired equitable title on the date of sale and legal title at ratification of the sale, retroactive to the date of sale. Campbell’s reliance on Simard v. White, 383 Md. 257 [ 859 A.2d 168 ] (2003) is misplaced. In its opinion, at page 273, the Court of Appeals quoted from Union Trust Co. v. Biggs, 153 Md. 50, 56 [ 137 A. 509 ] (1927), as follows: ... legal title does not vest until the deed to him is delivered, but, upon its delivery, this deed is not effective merely from the day of its execution but vests the property in the purchaser from the day of sale. See also, Merryman v. Bremmer, 250 Md. 1 [ 241 A.2d 558 ] (1968); Lannay v. Wilson, 30 Md. 257 (1869) (after final ratification, the purchaser is the owner from the day of sale).

Memorandum Opinion and Order at 2 (footnotes omitted). Judge Ross concluded that there was probable cause for the creation of a lien, entered the appropriate order and this appeal followed. Discussion Appellant seeks to overturn the circuit court’s ruling, and maintains that her liability for assessments is governed, and limited by, Real Prop. § 11-110(c), which relevantly provides 3 : (c) A unit owner shall be liable for all assessments, or installments thereof, coming due while he is the owner of a unit. In a voluntary grant the grantee shall be jointly and severally liable with the grantor for all unpaid assessments against the grantor for his share of the common expenses up to the time of the voluntary grant for which a statement of lien is recorded, without prejudice to the rights of the grantee to recover from the grantor the amounts paid by the grantee for such assessments.

Liability for assessments ²⁴⁶ may not be avoided by waiver of the use or enjoyment of any common element or by abandonment of the unit for which the assessments are made. She asserts that because she did not acquire title until December 28, 2009, the date on which the deed was executed, she was not the “owner” of the property until that date, and thus could not be “liable for all assessments, or installments thereof,” prior to December 28. She emphasizes that Bayside’s developer “carefully tracked” this statutory language when crafting the condominium bylaws that governed the “NonPayment of Assessment.” She concludes that, given the applicable provision of the Maryland Condominium Act and the related bylaw provision, she could not be liable for the assessments at issue in this case because she was not the “owner” during the interval subject to the assessment. Bayside, for its part, maintains that Ms. Campbell, as a foreclosure purchaser, obtained an “inchoate and equitable title” that become complete upon ratification, but then “the ratification retroact[ed]” such that she is recognized as the owner from the date of the sale.

We agree with Bayside and explain. In Merryman v. Bremmer, 250 Md. 1 , 241 A.2d 558 (1968), the trustee, Merryman, filed a petition to set aside the sale of certain real estate to the respondent, one Bremmer. The chancellor directed the trustee to execute a deed conveying the property to Bremmer, so long as Bremmer paid the balance due on the purchase and applicable taxes. The Court of Appeals upheld the chancellor’s ruling.

The Court ruled, inter alia, that Bremmer was entitled to maintain his equitable title, even, we note, over the passage of a considerable number of years, subject to remedies at law that the trustee could, but did not, utilize to compel Bremmer to comply with the terms of the sale. On this issue, Judge Barnes said for Court: The sale involved in the present case is a judicial sale of real estate and not a conventional sale. Our predecessors have established the rights of the parties when land is sold at a judicial sale. A sale made by order of court is an executory contract, subject to the filing of exceptions. ²⁴⁷ Hunting v. Walter, 33 Md. 60 (1870).

The court itself is the vendor, the trustee being merely the agent of the court to carry into effect the order of court directing the sale, and upon final ratification of the sale by the court the contract of purchase becomes complete. Lurman v. Hubner, 75 Md. 268 , 23 A. 646 (1892). When the sale is finally ratified, the purchaser’s inchoate equitable title, acquired at the time of the acceptance of his offer by the trustee, becomes complete and the purchaser’s equitable title is established retroactively to the time of the original acceptance of the offer by the trustee. The purchaser is entitled to the rents and profits of the land sold as he has become the substantial owner of the property.

He is not only entitled to possession of the property, but it remains at his risk, even though legal title may not be conveyed. Farmers’ Bank v. Clark [Clarke], 28 Md. 145 (1868). Miller, Equity Procedure § 512, page 604 (1897). If the land appreciates in value that benefit accrues to the purchaser; if it depreciates in value that is the purchaser’s loss.

The purchaser is entitled to maintain his equitable title as the substantial owner of the land until he is divested of it as provided by law. The legal procedures to accomplish such divesting are well established. Merryman v. Bremmer, 250 Md. at 8 , 241 A.2d 558 . The case of Donald v. Chaney, 302 Md. 465 , 488 A.2d 971 (1985) is instructive.

Donald involved the