Select Portfolio Servicing, Inc. v. Saddlebrook West Utility Co.

Deborah S. Eyler, J. In this appeal, we hold that a Declaration recorded by the developer of a subdivision created a lien that secured payment of water and sewer charges; the lien could be enforced under the terms of the Declaration, without resort to the Maryland Contract Lien Act; and the lien has priority over a later recorded refinance deed of trust (“DOT”) against the property. Select Portfolio Servicing, Inc. (“SPS”), the appellant, is the holder of the DOT. Saddlebrook West, LLC (“Saddle-brook”), and Saddlebrook West Utility Company, LLC (“Utility”), the appellees, are the developer and its wholly owned subsidiary. Our decision affirms a declaratory judgment entered by the Circuit Court for Prince George’s County.

FACTS AND PROCEEDINGS In 1999, Saddlebrook embarked on a plan to purchase raw land in Bowie on which to build the Saddlebrook West residential subdivision (“the Subdivision”). The first phase of the Subdivision was to be comprised of 187 lots on which single family homes would be built. That is the only phase of the Subdivision this case concerns. The parcel of land is located within the Washington Suburban Sanitary District.

In December of 1999, Saddlebrook and the Washington Suburban Sanitary Commission (“WSSC”) entered into a Memorandum of Understanding (“MOU”) by which the WSSC authorized Saddlebrook to “construct water and/or sewer extensions” within the planned Subdivision, subject to the WSSC’s inspection and approval. Saddlebrook purchased bonds to secure its obligation to perform under the MOU. ²⁴⁸ On February 4, 2000, Saddlebrook purchased the parcel of raw land by deed that was recorded in the Land Records for Prince George’s County (“Land Records”) on February 17, 2000. (Liber 18643, Folio 461). Then, on April 4, 2000, Saddle-brook, as “Declarant,” executed a “Declaration of Deferred Water and Sewer Charges” (“the Declaration”) in favor of Utility.

The Declaration imposes an annual Water and Sewer Charge on the owner of each lot in the Subdivision, to be paid by the lot owner to Utility. As relevant to the issues in this case, the Declaration states: • Utility intends to provide water and sewer infrastructure and connections for the lots.[ 1 ] • To recoup that cost, Saddlebrook will establish an annual Water and Sewer Charge on each lot. • By accepting his deed, the lot owner agrees to pay Utility the Water and Sewer Charge for the lot, and any past due and unpaid such charge. The charge for each lot .is $700 per year, for 23 years. The charge comes due on January 1 of the year following the owner’s purchase of the lot.t 2 ] (Saddlebrook and any “Builder” are not lot owners.1 3 3) • Also by accepting his deed, the lot owner “grants [Utility] a lien to secure payment of’ the Water and Sewer Charge.

The lien “shall have priority from the date upon which this Declaration is recorded ... over any subse ²⁴⁹ quently recorded or created Ken, deed of trust, mortgage or other instrument encumbering” the lot. • The lot owner “grants to [UtiKty] a power of sale, and assents to the entry of a decree and order for the sale of th[e l]ot upon a default by the [lot o]wner under this Declaration.” • If a lot owner fails to pay the Water and Sewer Charge, UtiKty shall be entitled to all available legal or equitable reKef, including acceleration of the Water and Sewer Charge; an action at law against the lot owner; foreclosure on the “Ken” “in the manner now or hereafter provided for the foreclosure of mortgages, deeds of trust or other Kens on real property in ... Maryland”; and foreclosure on the “Ken” under the Maryland Contract Lien Act. • All lots will be held, encumbered, sold, etc., “subject to the covenants, conditions, restrictions, obKgations and charges set forth in this Declaration,” which “shall run with such [l]ots and be binding on all parties having any right, title or interest in all or any portion of such [l]ots,” etc., and “shall inure to the benefit of [Saddlebrook], UtiKty and their respective successors, transferees and assigns.” • “All pro-visions of this Declaration, including the benefits and burdens, shaK touch, concern and run with the land[.]” On May 17, 2000, the Declaration was recorded in the Land Records. (Liber 13818, FoKo 503). An exhibit to the Declaration identifies by lot, block, and plat number the 187 lots to which the Declaration pertains.

A “Land Instrument Intake Sheet” for the Declaration shows that Saddlebrook paid a $75 recordation charge and a $2 surcharge. No recordation or transfer taxes were charged and none were paid. Saddlebrook paid W.F. Wilson & Sons, Inc. (“Wilson”), to construct and install the water and sewer facilities for the 187 lots. By letter of November 21, 2000, the WSSC certified that the conditions of the MOU had been satisfied and that those lots were being released for service.

Almost a year later, on ²⁵⁰ October 3, 2001, Saddlebrook entered into a “Lot Purchase Agreement” with Maryland Homes, LLC (“Maryland Homes”), a builder, for the 187 lots. A copy of the Declaration was attached to the Lot Purchase Agreement and “incorporated [tjherein by reference.” Under the terms of the Lot Purchase Agreement, Maryland Homes agreed to disclose the existence of an “annual deferred water and sewer benefit charge” to any purchaser of a developed lot. It further agreed “to include in sales contracts to home purchasers for homes to be constructed all required and appropriate notices/disclosures pertaining to the Water and Sewer Systems mandated by applicable lawC 4 ] and acknowledging receipt by the home purchaser of such disclosures, which must be furnished at the time of contract.” The 187 lots were conveyed to Maryland Homes by separate deeds that covered one or more lots. The property at issue in this case is lot 5, block J, Plat 20 of the Subdivision, later designated 8201 River Park Road (“the Property”).

A deed conveying that lot and three others to Maryland Homes was recorded in the Land Records on November 13, 2001. (Liber 15170, Folio 694). It states that it is subject to “all easements, covenants and restrictions of record.” Maryland Homes built single-family homes on all 187 lots. On April 1, 2002, Charles Bradley, Jr., purchased the Property for $347,388.

He financed the transaction by a $351,922 purchase-money mortgage. The deed conveying the Property to ²⁵¹ Mr. Bradley was recorded in the Land Records on April 23, 2002. (Liber 15727, Folio 361). It states that it is made “SUBJECT to all easements, covenants, and restrictions of record.” On January 1, 2003, Mr. Bradley’s first annual $700 Water and Sewer Charge came due.

He did not pay it. He also did not pay the $700 Water and Sewer Charge that came due a year later, on January 1, 2004. On March 1, 2004, pursuant to the Maryland Contract Lien Act (“MCLA”), Md. Code (1974, 2003 Repl. Vol.), sections 14-201-206, of the Real Property Article (“RP”), Tidewater Property Management, Inc., acting as Utility’s agent, recorded in the Land Records a “Statement of Lien” against the Property, for $1,210, for the unpaid Water and Sewer Charges.

(Liber 19023, Folio 451), On November 17, 2004, it recorded a second “Statement of Lien” against the Property, for $1,578.80, also for the unpaid Water and Sewer Charges. (Liber 20718, Folio 127). Both Statements of Lien recite that the Property is subject to the Declaration and that, pursuant to the MCLA, is subject to a lien for Water and Sewer Charges, plus the cost to record the Statements of Lien. The next year, by deed dated January 6, 2005, Mr. Bradley conveyed the Property to Sherrylyn Mitchell for $565,000.

The deed was recorded in the Land Records on March 8, 2005. (Liber 21579, Folio 001). The deed does not include a “subject to all easements, covenants, and restrictions of record” clause, and makes no reference to the Declaration. In the deed, Mr. Bradley represents that he “has not done or suffered to be done any act, matter or thing whatsoever, to encumber the property hereby conveyed[.]” Ms. Mitchell had been living in the Property since 2002, but the record does not disclose the circumstances under which she was living there or her relationship to Mr. Bradley. 5 A Land Instrument Intake Sheet shows that Ms. Mitchell fi ²⁵² nanced the purchase with a $480,250 loan, and that a deed of trust securing the loan against the Property was recorded in the Land Records.

The deed of trust is not in the record, however, and there is nothing in the record showing the source of Ms. Mitchell’s loan. The record includes a form document entitled “NOTICE TO PURCHASER OF DEFERRED WATER AND SEWER CHARGES,” acknowledging that the Property is subject to the annual Water and Sewer Charge of $700. Ms. Mitchell’s signature is on the document, next to the date “9-1-01,” also in her handwriting. The document also is signed by a representative of Maryland Homes, which is described as the “Seller.” That signature is dated “9/4/01.” These dates are long before the conveyance to Ms. Mitchell, and indeed pre-date the conveyance by Maryland Homes to Mr. Bradley.

The Statements of Lien were not paid, cleared, and released upon closing of the sale of the Property by Mr. Bradley to Ms. Mitchell. Nothing in the record explains why that did not happen. Sometime in early 2005, Ms. Mitchell decided to refinance. She applied to Long Beach Mortgage Company (“Long Beach”) for a $552,000 loan.

Before extending the loan, Long Beach ordered a two-party title search of the Property, ie., a search that included Ms. Mitchell and Mr. Bradley, but not prior owners. The search did not reveal the Declaration. Also, the person who performed the title search did not find the recorded Statements of Lien. On May 25, 2006, Ms. Mitchell settled on the refinance loan.

The Statements of Lien were not paid, cleared, and released at closing. Ms. Mitchell’s refinance loan was secured by the DOT to Long Beach, which was recorded in the Land Records on August 18, 2006. (Liber 25810, Folio 228). 6 The Statements of Lien expired in 2007. See RP § 14-204(c) (an action to foreclose under a statement of ²⁵³ lien must be commenced within three years of the date of recordation). 7 On October 7, 2010, in the Circuit Court for Prince George’s County, agents of Utility filed an order to docket, seeking to foreclose on its lien against the Property under the Declaration, for non-payment of the Water and Sewer Charges.

By then, Long Beach had sold Ms. Mitchell’s loan to JP Morgan Chase Bank, N.A. (“Chase”). On March 5, 2012, Chase filed a motion to stay and dismiss. That same day, it filed the declaratory judgment action that gives rise to this appeal.

Utility canceled the foreclosure sale and voluntarily dismissed the foreclosure case. Chase filed a first amended complaint in the declaratory judgment action, which became the operative complaint. Sad-dlebrook, Utility, Ms. Mitchell, the Saddlebrook West Homeowners Association, Inc. (“the HOA”), and Utility’s agents in the foreclosure action (“the substitute trustees”) were named as defendants. Also named were the Clerk of the Circuit Court for Prince George’s County (“Clerk”), the Director of the Prince George’s County Office of Finance (“Finance Director”), and the Director of the State Department of Assessments and Taxation (“SDAT Director”) (collectively, the “public defendants”).

Chase alleged that the Declaration is not a lien instrument and therefore it did not create a lien against the Property. It pointed out that if the Declaration were a lien instrument there would have been no need for Utility to have obtained “Statements of Lien” under the MCLA. It asserted that, although the Declaration purports to create a lien, it was filed in the Land Records without payment of approximately $60,000 in recordation and transfer taxes required to record a lien instrument securing more than $3 million in Water and Sewer Charges. 8 ²⁵⁴ In Count I, Chase sought a finding that the Declaration is invalid and the DOT is the first priority lien against the Property. In Count II, it sought mandamus relief against the public defendants, requiring them to “either ... collect the appropriate taxes from ...

Utility or ... remove the Declaration from the Land Records.” 9 The circuit court granted summary judgment in favor of the public defendants in an order stating that “the dispute concerning the priority of the lien must be resolved between [Chase] and [Utility and u]ntil that time (if ever) no justiciable controversy exists between [Chase and the public defendants].” 10 The remaining parties engaged in discovery. ²⁵⁵ On September 17 and 18, 2018, Chase’s declaratory judgment action was tried to the court against Saddlebrook, Utility, and Ms. Mitchell (who was self-represented). Chase called three fact witnesses: John C. Puiles, 11 a member of Saddle-brook and the managing member of Utility (adversely); Ms. Mitchell (also adversely); and Albert Smith, Jr., Chase’s custodian of records. Mr. Puiles recounted the history of the Subdivision and testified that Saddlebrook paid Wilson to construct and install the water and sewer facilities for the 187 lots. Saddlebrook hired counsel to draft the Declaration.

Mr. Puiles identified the MOU between the WSSC and Saddlebrook and the contract between Saddlebrook and Wilson, under which those facilities in fact were constructed and installed and Wilson was paid. He identified the Declaration and the Lot Purchase Agreement. He stated that at the time of settlement on the sales of lots by Maryland Homes to lot owners, Maryland Homes was required “by contract,” ie., under the terms of the Lot Purchase Agreement, to provide a “NOTICE TO PURCHASER OF DEFERRED WATER AND SEWER CHARGES” like the one signed by Mitchell. These documents all were moved into evidence.

Ms. Mitchell testified that since purchasing the Property, she has received bills for Water and Sewer Charges. She did not testify whether she has paid these charges. 12 ²⁵⁶ Chase called three expert witnesses. Kristy Wingate, a title abstractor, testified that lenders typically only order a two-party examination for a refinance loan, and such an examination would not have revealed the Declaration. If competently performed, such an examination would have revealed the Statements of Lien, however, because they were recorded after Mr. Bradley took title to the Property.

And the Statements of Lien would have resulted in the discovery of the Declaration, because they referenced the Declaration by its Liber and Folio numbers. 13 According to Ms. Wingate, if the Declaration had been discovered in the title search, the industry standard would have been to report it as an exception to the title, not as a lien or encumbrance. Lynne Boileau, an attorney for a title insurance company, opined as well that a declaration for water and sewer charges, such as the Declaration in this case, would be treated as an exception on a title report, ie., it would not be covered by the title insurance policy. It “affects the property and the use of the property and the way the property owner can use the property. So [the] property conveys subject to [the Declaration], and it is an important document but we do not view it as an existing lien.” However, “a lien could arise if these charges are not paid.” Specifically, she opined that if the water and sewer charge is not paid, “a statement of lien can be recorded [under the MOLA], and that we do view as an encumbrance on property that would have to be paid, cleared and released.” Ms. Boileau further opined that were a title insurance company to consider a declaration of this sort as creating a lien against the property being conveyed, it would not issue a title insurance policy “unless [the] property was either released ²⁵⁷ from the lien altogether or it was subordinated, the lien was subordinated to [the loan being issued].” Shawn Goldfaden, a lawyer and underwriter for a title insurance company, opined that the Declaration is a “notice instrument” not a “lien instrument.” If he had been underwriting a title insurance policy for the Property, he would have agreed “to insure title with [the Declaration] shown as an exception in the policy itself.” The Declaration would not need to be “satisfied, subordinated, or paid” before a title commitment was issued.

This is so, Mr. Goldfaden explained, because the Declaration gives notice of an annual assessment but does not create a present lien interest that “trump[s] ... priority” over a properly recorded deed of trust securing a loan. At the close of Chase’s case-in-chief, the court granted judgment in favor of Saddlebrook and Utility on the claim that the Declaration could not be a valid lien instrument because recordation and transfer taxes were not paid. In their case, Saddlebrook and Utility called Brian Bichy, a real estate lawyer, who was accepted as an expert in that field. Mr. Bichy testified that he routinely drafts declarations for water and sewer charges that are nearly identical to the Declaration.

He has initiated foreclosure proceedings under the power of sale provisions in those declarations; and in some of those cases, courts have ratified foreclosure sales. He explained that in drafting these declarations he relies upon certain provisions of the Anne Arundel County Code (“AACC”) pertaining to deferred water and sewer charges. He acknowledged that there is no similar provision in the Prince George’s County Code (“PGCC”). Mr. Bichy opined that the Declaration “creates a lien for the water and sewer charges based on the covenant that’s recorded in the specific paragraph where each owner is granting a lien for repayment of the water and sewer charges, as well as granting a power of sale to execute on that lien.” He further opined that the Declaration is a covenant running with the land and an “interest against” the Property.

He did not express an opinion about the lien priority of the Declaration. ²⁵⁸ After the evidence phase of the case concluded and the court heard closing arguments, the court directed counsel to submit proposed findings of fact and conclusions of law. Chase proposed the following: 1) the Declaration is void because it violates the Rule Against Perpetuities; 2) the Declaration is not a covenant running with the land because it does not touch and concern the land and because it lacks vertical privity; 3) the Declaration does not create a lien, but is a contractual agreement that, when a lot owner defaults upon payment of the annual water and sewer charge, Utility may obtain a lien; 4) in Maryland, the MCLA is the only vehicle by which to obtain a lien against real property based on a contract; 5) a lien obtained under the MCLA does not relate back in time, for recording purposes, to the date of the contractual agreement to create a lien; 6) the Statements of Lien that Utility obtained against the Property were valid, but because they expired, they had no impact on the priority of the DOT; and 7) the Declaration is not enforceable against third parties because recordation and transfer taxes were not paid. Saddlebrook and Utility proposed the following: 1) the Declaration created a lien against each lot that is subject to the Water and Sewer Charges, including the Property; 2) the lien was effective on the date the Declaration was recorded, which was before the DOT was recorded, and therefore the lien has priority over the DOT; 3) the Declaration satisfies the “touch and concern” and vertical privity requirements for a covenant running with the land; 4) the Declaration does not violate the Rule Against Perpetuities; and 5) the Declaration permits Saddlebrook/Utility to obtain a Statement of Lien under the MCLA, but that is not the only remedy available to it, nor does that mean that the Declaration did not create a lien. On November 20, 2013, the court docketed its final opinion and order. 14 It made the following findings of fact and conclu ²⁵⁹ sions of law.

Under the terms of the Declaration, Saddlebrook was required to install the water and sewer facilities for the Subdivision. Because Saddlebrook fulfilled that obligation, the Declaration “create[d] a lien.” The lien is “what some refer to as a ‘super lien.’ No developer would undertake this development process without legal assurances of payment and assurances that such payment would be a priority.” The lien on a lot “take[s] effect” when the owner takes title to the lot. In this case, the lien on the Property took effect in 2002, when Mr. Bradley purchased the Property. That preceded the recording of the DOT in the Land Records.

Because it was reasonable to infer that the lots in the first phase of the Subdivision would be sold within the perpetuities period, and therefore the lien for each lot would arise within that period, the Declaration does not violate the Rule Against Perpetuities and is not void. The lien created by the Declaration “is a covenant running with the land”; Saddlebrook benefits from the payment by lot owners of the Water and Sewer Charges, and the charges “certainly touch the land.” The court further found that because the Declaration was recorded in the Land Records, the “world” was on constructive notice of the lien it created. Long Beach’s two-party title search did not reveal the Declaration, “despite references to it in a number of recorded filings in the land records.” And Long Beach did not order the type of title search “that everyone agrees would have revealed the Declaration.” “One who does not request a thorough search ... does so at his peril. ... Here, [Chase] comes to court complaining that it shouldn’t be bound by something it didn’t know about when in fact it was by its own lack of a competent search that it was unaware.” Finally, Saddlebrook did not pay recordation and transfer taxes when the Declaration was recorded in the Land Records because none were charged.

Any “mistake” in this regard ²⁶⁰ “was the [Cjounty’s mistake” and did not affect the validity of the Declaration. The court ruled that the Declaration “is a valid, enforceable first-priority lien encumbering the [Property .... ” 15 Although the court did not expressly address Chase’s argument that the MCLA was the sole vehicle for enforcement of the lien, it was implicit in the court’s lien priority determination that it rejected that argument. Chase noted a timely appeal. During the pendency of the appeal, Chase sold its interest in the DOT to SPS, and SPS was substituted for Chase as the appellant in this Court.

SPS presents four questions for review, which we have reordered and rephrased: I. Did the trial court err in ruling that the Declaration is not void as in violation of the Rule Against Perpetuities?

II

Did the trial court err in ruling that the Declaration is a covenant running with the land and therefore binds downstream purchasers?

III

Did the trial court err in ruling that the fact that recordation and transfer taxes were not paid did not render the Declaration unenforceable as a lien instrument?

IV

Did the trial court err in ruling that the Declaration created a lien that could be enforced other than through the process set forth in the Maryland Contract Lien Act, and that the lien created by the Declaration has priority over the DOT? Finding no error on the part of the trial court, we shall affirm the judgment. ²⁶¹ DISCUSSION Before delving into the issues, we shall summarize them, how they interrelate, and how SPS maintains their resolution will affect the outcome of this appeal. First, is any lien the Declaration created of no effect because the Declaration violates the Rule Against Perpetuities and therefore is void? If the answer to that question is yes, it is dispositive of the entire appeal.

Second, and obviously alternatively, is any lien created by the Declaration a covenant running with the land? A negative answer to that question also is dispositive, because, if the lien is not a covenant running with the land, Ms. Mitchell, as a subsequent purchaser, would not be bound by the obligation to pay the Water and Sewer Charges, and the lien would be of no effect as to her or Chase. Third, and likewise alternatively, does the fact that recordation and transfer taxes were not paid when the Declaration was recorded mean that the Declaration could not create a lien? An affirmative answer to this question is dispositive as well.

Finally, if none of those issues is resolved dispositively, did the Declaration create a lien against the Property to secure payment of Water and Sewer Charges, effective either when the Declaration was recorded or (as the trial court found) when Mr. Bradley took title to the Property? If so, can the lien be enforced by Utility, exercising its power of sale under the Declaration, through a foreclosure action against the Property, or can the lien only be enforced pursuant to the MCLA? If the lien only can be enforced under the MCLA, SPS’s DOT has first priority status because the Statements of Lien that Utility obtained under the MCLA have expired, and any Statement of Lien it may obtain in the future will be effective only from the date it is recorded. If the lien can be enforced outside the MCLA process, then whether the lien takes priority over a competing lien held by a third party will depend, in part, on whether the third party had adequate notice of the lien created by the Declaration when its own lien was recorded. ²⁶² I. Rule Against Perpetuities Under the rule against perpetuities, “[n]o interest [in property] is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.” Dorado Ltd. P’ship v. Broadneck Dev.

Corp. 317 Md. 148, 152 , 562 A.2d 757 (1989) (quoting Fitzpatrick v. Mercantile-Safe Deposit & Tr. Co., 220 Md. 534, 541 , 155 A.2d 702 (1959), in turn quoting Gray, The Rule Against Perpetuities, § 201 (4th ed. 1942)). The rule against perpetuities applies to a contract that “creates an equitable right in real property.” Id. at 152, 562 A.2d 757 , It is designed to invalidate interests in real property that “vest too remotely.” Fitzpatrick, 220 Md. at 541 , 155 A.2d 702 . “The term ‘vested,’ as used in the law of property, signifies that there has been the fixation of a present right to either the immediate or future enjoyment of property.” Chism v. Reese, 190 Md. 311, 320 , 58 A.2d 643 (1948) (citing Curtis v. Md. Baptist Union Ass’n, 176 Md. 430, 438 , 5 A.2d 836 (1939)). “The interest must vest in the sense of becoming a vested remainder.” Id. In Brown v. Parran, 120 Md.App. 653 , 708 A.2d 12 (1998), we gave the following straightforward description of the rule against perpetuities and the reasons underlying it: The rule against perpetuities is a limitation on contingent future interests in property.

The rule prevents property interests from vesting too remotely, so that current owners will not be discouraged from making the most effective uses of their properties. The rule is concerned with restrictions that render title uncertain as well as restraints on alienation. Under the traditional rule adhered to in Maryland, the future interest, at the effective date of the instrument creating it, must vest within the period of the rule (life in being plus 21 years). .... [A] court must construe the conveyance in question independent of the rule [against perpetuities] and then apply the rule. The rule against perpetuities applies to contracts for the sale of real property....

If a condition of ²⁶³ the contract possibly may cause legal title to vest in the purchaser outside the period of the rule, the contract violates the rule and is not enforceable. Id. at 658-59 , 708 A.2d 12 (citations omitted). SPS contends the Declaration violates the rule against perpetuities, and therefore “is unenforceable.” It argues as follows. When the Declaration was executed and recorded in the Land Records in April and May of 2000, Saddlebrook intended to subdivide its raw land into lots, install water and sewer facilities, and sell the lots to a builder, which would build single family homes on the lots and sell them to individual owners.

Under the Declaration as interpreted by the trial court, when an individual owner takes title to his lot, he grants the Utility a lien against the lot for Water and Sewer Charges. At that point, the lien vests. When the Declaration was executed and recorded, however, it was not possible to know that any of the 187 lots in the first phase of the Subdivision ever would be sold to individual lot owners within 21 years of a life in being. Therefore, according to SPS, “the future vesting of [the] lien interest violates the Rule Against Perpetuities, because it may vest too remotely.” SPS asserts that the trial court erred as a matter of law by reading into the Declaration a reasonable time, within the perpetuities period, by which the lots would be sold to individual owners and the lien would vest.

SPS relies upon Dorado, 317 Md. 148 , 562 A.2d 757 , to support its argument. In that case, two parties entered into a contract for the sale of 112 lots of real property, which the buyer intended to develop. The contract stated: Buyer agrees to purchase and settle on [the 112] lots covered by the Contract of Sale by payment of the purchase price in cash not later than ninety (90) days after the Seller has delivered to Buyer evidence of sewer allocations for such lots. Time is of the essence of all the provisions of the Contract of Sale.

Id. at 150 , 562 A.2d 757 (emphasis added). The county in which the lots were located had imposed a moratorium on sewer allocations. The seller attempted to ²⁶⁴ obtain sewer allocations, but could not do so because of the moratorium. The seller brought a declaratory judgment action against the buyer, seeking an adjudication, on several alternative grounds, that the contract of sale was void.

One argument the seller advanced was that the contract violated the rule against perpetuities because the buyer’s fee simple interest in the lots might not vest within the perpetuities period. Specifically, the seller argued that whether legal title to the lots would be delivered to the buyer was contingent upon the seller’s obtaining sewer allocations, and there was no certainty that that ever would happen. The circuit court rejected that argument and the seller’s alternative arguments. On appeal, this Court reversed based on an alternative argument.

The Court of Appeals took the case and held that the contract of sale violated the rule against perpetuities and therefore was void. It recognized that in some circumstances, when a contract does not specify a time for performance, the court may imply a reasonable time for performance. It concluded that it is not proper for a court to do so when the time for performance is contingent upon the happening of an event outside the control of either party to the contract. The seller had applied for the sewer allocations, which were not granted because of the moratorium, and there was nothing more either the buyer or the seller could do to satisfy the sewer allocation contingency.

Only the county could lift the moratorium and grant the sewer allocations, and whether it would do so within the perpetuities period was unknown. The Court explained, “[Wjhere the occurrence of the condition precedent to conveyance is beyond the control of the parties, a reasonable time for performance, less than the perpetuities period, cannot be implied.” 317 Md. at 158 , 562 A.2d 757 . Saddlebrook and Utility point out that several cases decided by this Court have distinguished Dorado, thereby clarifying its holding. In Stewart v. Tuli, 82 Md.App. 726 , 573 A.2d 109 (1990), sellers of residential real property entered into a contract of sale with a buyer, but declared the contract void when the buyer’s financial information was not satisfactory.

The sellers then entered into a second contract of sale with ²⁶⁵ another buyer. An addendum provided that if the first buyer “attempted to keep ‘his contract alive,’ ” the second buyer would be relieved from going to settlement until such time as the sellers could grant clear title. Id. at 729 , 573 A.2d 109 . The contract also included a clause concerning “TITLE,” in which the sellers agreed to convey title and that, “ ‘[i]n case legal steps are necessary to perfect the title, such action must be taken promptly by [the sellers] at [their] own expense’ ” and the time for settlement would be “ ‘extended for the period necessary for such prompt action.’ ” Id. at 735 , 573 A.2d 109 .

The first buyer filed a complaint for specific performance of his contract against the sellers, arguing, among other things, that the second contract was void because it violated the rule against perpetuities. The second buyer filed a motion to intervene, which the circuit court denied. The second buyer appealed. We held that the second buyer was entitled to intervene as of right, and went on to address the perpetuities issue.

Relying upon Dorado , the first buyer argued that the provision in the second contract extending the time for performance until the sellers could convey clear title made the time for performance so indefinite that it could not be said that clear title would be delivered within the perpetuities period. We rejected that argument, explaining that it was central to the Court’s holding in Dorado that the occurrence of a condition precedent to the sale was in the hands of a third party and outside the control of the parties. By contrast, the sellers had it within their control to bring an action in court to obtain clear title, and “the contract mandated that any title clearing litigation be completed within a reasonable period of time.” Id. at 736, 573 A.2d 109 . Even though the outcome of any such litigation would be in the hands of a court, not the sellers, the title clearing litigation was to be resolved in a reasonable period of time, and “[i]t would be ridiculous to suggest that a reasonable period of time would exceed a life in being and 21 years.” Id. ²⁶⁶ The year after Stewart was decided, this Court again rejected an argument that a contract for the sale of land violated the rule against perpetuities because the time for performance had been extended indefinitely until the sellers could convey clear title.

In Hays v. Coe, 88 Md.App. 491 , 595 A.2d 484 (1991), unlike in Stewart , there was no contract provision requiring that action to correct title problems be taken within a reasonable period of time. Nevertheless, we read the contract of sale to imply a reasonable time in which to correct any title defects. We held that that time would occur within the perpetuities period, and therefore the contract did not violate the rule against perpetuities. The Court of Appeals vacated our decision on another ground, but held that the perpetuities issue was properly decided.

Coe v. Hays, 328 Md. 350, 362 , 614 A.2d 576 (1992). Finally, in Brown v. Parran, 120 Md.App. 653 , 708 A.2d 12 , we synthesized the holdings in Dorado, Stewart, and Hays. The parties’ contract for the sale of real property conditioned settlement upon the issuance of building permits for 21 building sites. It did not specify a time by which that condition had to be performed, however.

The circuit court, citing Dorado , held that the contract violated the rule against perpetuities because the condition might not be satisfied within the perpe-tuities period. Distinguishing Dorado , and applying Stewart and Hays, this Court reversed. We explained that, in Dorado , the process that had to be undertaken to satisfy the sewer allocation contingency was not available at all, due to the moratorium. So, not only was the process in the hands of a third party, the process could not be used; and the “duration of [the] moratorium [was] uncertain and dependent upon governmental and political policy decisions.” 120 Md.App. at 664 , 708 A.2d 12 .

In that circumstance, “a reasonable time to satisfy, if possible, [the] criteria specified in statute or regulation is not ascertainable by the court[,]” and consequently cannot be implied in the contract. Id, By contrast, in Stewart and Hays, the process for satisfying the clear title contingencies was in the hands of a third party (a court), but was available to the parties, and a ²⁶⁷ court could imply a reasonable period of time in which the contingency could be satisfied. We concluded that “just as it would be ridiculous to presume that title clearing litigation might take 21 years to complete, it would be ridiculous to presume that it might take [the county authorities] 21 years to act on [the seller’s] application for permits.” 120 Md.App. at 663 , 708 A.2d 12 (footnote omitted). We return to the case at bar.

As noted, SPS maintains that, when the Declaration was executed and recorded, it was impossible to know whether, once the builder purchased the lots, any lot would be completed and sold within 21 years of a life in being; or, because there is no designated life in being, within 21 years. In other words, because it was possible that the builder would construct the homes on the lots but not a single one of them would be sold before 2022, the Declaration’s provision regarding liens against the lots for Water and Sewer Charges violates the rule against perpetuities. And, the trial court erred by reading the Declaration to imply a reasonable period of time in which homes on the lots would be sold to individual owners. This argument is not supported by the case law.

The ease at bar has little in common with Dorado , or with the other pertinent rule against perpetuities cases for that matter. There is no actual contingency to the vesting of the interest in real property like those at issue in the relevant cases. The development of land into a residential subdivision begins with the purchase of the real property for development and ends with the sales of newly constructed homes to individual purchasers. Those sales simply are the expected last step in the development.

Obviously, there would be no point in developing a residential subdivision if it were not reasonable to assume that, when construction is complete, the buyers will come. In any event, SPS acknowledges that Saddlebrook was in control of the timing of the subdivision process up to the point when the completed homes would be offered for sale. The trial court read the Declaration to imply that the sales of the newly ²⁶⁸ constructed homes in the Subdivision to individual lot owners would take place within a reasonable period of time and that that reasonable period of time would be less than a life in being plus 21 years, and indeed less than 21 years. The trial court’s ruling in this regard was consistent with the law of contracts, which, in the absence of a time for performance in a contract, permits a court to imply a reasonable time for performance, and with the cases discussed above, which hold that when a contingency to the conveyance of an interest in real property can be satisfied by means of a process by which the contingency can be removed, and the parties, or one of them can access that process, a court can imply a reasonable time by which the contingency can be removed.

See Brown, 120 Md.App. at 663 , 708 A.2d 12 . Here, the supposed “contingency” is the sale of the finished homes to home buyers, which is what everyone involved in the development of a residential subdivision expects to happen. There is no inaccessible “process” that must be used to satisfy this “contingency.” The language used by this Court in Stewart and Brown is appropriate here: to the extent the sales of homes in the Subdivision is a contingency at all (which it is not), it is ridiculous to think that the homes would not be sold within 21 years of the execution and recording of the Declaration. The lien provision of the Declaration does not violate the rule against perpetuities. 16 II.

Covenant Running With the Land SPS contends the Declaration s requirement that lot owners pay Water and Sewer Charges is not a covenant running with the land; therefore, the obligation to pay does not apply to “downstream” purchasers of the lots. And, because the downstream purchasers have no obligation to pay the Water and ²⁶⁹ Sewer Charges, there can be no liens against their properties for those charges. In Gallagher v. Bell, 69 Md.App. 199 , 516 A.2d 1028 (1986), we explained: Covenants made by parties to the conveyance of an interest in land may be regarded as being either personal in nature or as running with the land. The difference, as observed in 5 R. Powell, The Law of Real Property, § 673[1], p. 60-66, “hinges upon whether the original covenanting parties’ respective rights or duties can devolve upon their successors.” Id. at 206, 516 A.2d 1028 .

For a covenant to run with the land, it must “touch and concern” the land; the original parties to the covenant must have intended that it run with the land; there must be some form of privity of estate; and the covenant must be in writing. Cnty. Comm’rs of Charles Cty. v. St. Charles Assocs. Ltd. P’ship (“St. Charles”), 366 Md. 426, 450 , 784 A.2d 545 (2001); Mercantile-Safe Deposit & Tr.

Co. v. Mayor and City Council of Baltimore, 308 Md. 627, 632 , 521 A.2d 734 (1987). “Whether a covenant touches and concerns the land may be considered in terms of the burdens or benefits it imposes. Thus, the test is met if the performance of the covenant will ‘tend necessarily to enhance [the] value [of the land].’ ” Mercantile, 308 Md. at 633 , 521 A.2d 734 (quoting Whalen v. B & O R.R. Co., 108 Md. 11, 20 , 69 A. 390 (1908) (alterations in Mercantile)). The touch and concern test is in the alternative; that is, it will be satisfied if, upon performance of the covenant, either the burden or the benefit of the covenant will tend to enhance the value of the land. Id.

The benefit or burden of a covenant “will not pass to a successor in interest unless the parties intended that result.” Gallagher, 69 Md.App. at 212 , 516 A.2d 1028 (footnote omitted). The intention of the parties may be gleaned from the language of the agreement alone or from that language and other indicia of intent. Bright v. Lake Linganore Ass’n, 104 Md.App. 394, 418 , 656 A.2d 377 (1995). However, “a covenant that, by its very terms, runs with the land may not be ²⁷⁰ enforceable if the parties creating the covenant intend that it not run.” Id. at 421 , 656 A.2d 377 .

The presence or absence of language in the parties’ agreement that binds successors and assigns is of “ ‘critical effect.’ ” St. Charles, 366 Md. at 448 , 784 A.2d 545 (quoting Mercantile, 308 Md. at 635 , 521 A.2d 734 ). A covenant respecting a future obligation may run with the land when “ ‘the performance of the covenant touches and concerns the land within the meaning of the “benefit or burden” standard,’ ” and the agreement “ ‘expressly binds successors and assigns.’ ” Id. (quoting Mercantile, 308 Md. at 636 , 521 A.2d 734 ). Privity of estate can be satisfied by proof of “vertical privity,” which “focuses ... on the devolutional relationships.” Gallagher, 69 Md.App. at 217 , 516 A.2d 1028 .

For vertical privity to be satisfied, it only is necessary that “ ‘the person presently claiming the benefit, or being subjected to the burden, is a successor to the estate of the original person so benefitted or burdened.” Id. at 216 , 516 A.2d 1028 (quoting Powell, supra, § 673[2], 60-64). SPS argues that, as a matter of law, the obligation to pay Water and Sewer Charges as established by the Declaration is not a covenant running with the land, for three reasons, the first two of which relate to the “touch and concern the land” requirement. It maintains that a covenant “must extend to the land, so that the thing required to be done will affect the quality, value or mode of enjoying the estate conveyed,” id. at 209, 516 A.2d 1028 (emphasis added); but here, the Declaration did not require Saddlebrook or Utility to build the water and sewer facilities or to do anything at all. In other words, there was no burden on Saddlebrook or Utility.

Second, even if the Declaration required Saddlebrook or Utility to build the water and sewer facility, or to do or refrain from doing something else respecting the Subdivision property, under Sanitary Facilities II v. Blum, 22 Md.App. 90 , 322 A.2d 228 (1974), the promise by downstream purchasers of lots to pay for the previously constructed facilities does not touch and concern the land, because that does not benefit or burden the use, ²⁷¹ occupation, or enjoyment of the estate while it is owned by the covenanting parties. Finally, SPS’s third argument is that the privity of estate element is not satisfied because Utility, the entity that benefits from the payment of the Water and Sewer Charges by lot owners, is not in vertical privity with any downstream purchaser. There is no merit in any of these arguments. We disagree that the Declaration did not impose any obligation upon Saddlebrook or Utility to build the water and sewer facilities for the 187 lots.

The recitals to the Declaration, which are “incorporated in and made a material part of this Declaration,” state that Saddlebrook and Utility “intend to provide the Lots with access to and service from sewer pipes and transmission lines in the streets and/or in the public rights-of-way,” and with “house connections” thereto, ie., “Sewer Facilities”; and “intend to provide the Lots with access to and service from water pipes and transmission lines in the streets and/or the public rights-of-way,” and with “house connections” thereto, ie., “Water Facilities.” It is upon Saddlebrook’s and Utility’s performance of their intended acts— actually constructing the water and sewer facilities — that the promise by each lot owner to pay the annual Water and Sewer Charges comes to fruition. The Declaration cannot reasonably be read to mean that Saddlebrook and Utility were not undertaking an obligation to construct the water and sewer facilities. Without water and sewer facilities, there could be no residential development at all. This was not a stated intention to build an amenity that was peripheral to the development and not necessary to the development coming into existence.

It was a promise to build the water and sewer facilities necessary for the subdivision to be built; and only upon doing so would the lot owners become obligated to pay the annual Water and Sewer Charges. In addition, the evidence included the MOU between Saddlebrook and the WSSC, by which Saddlebrook agreed to build the water and sewer facilities with the WSSC’s supervision and approval. And of course that is what Saddlebrook did. ²⁷² On the second point, Sanitary Facilities II, 22 Md.App. at 90 , 322 A.2d 228 , is easily distinguishable from the case at bar and illustrates why there is no merit in the first point. In that case, a developer owned several companies through which he did business.

One such company, Registered Realty, Inc. (“Registered”), purchased raw land on which to develop a subdivision. Two years later, Registered conveyed it to Sanitary Facilities II, Inc. (“SF”), another such company. SF immediately reconveyed the land to Registered by a “Deed and Agreement” that stated that Registered intended to construct water and sewer facilities for the lots in the subdivision and that it was the purpose of the Deed and Agreement to make a covenant and agreement to pay water and sewer charges (calculated like a front-foot benefit) that would run with the land and be binding upon each lot and the future owners of the lots; and that the annual charge would be a lien on the future lot owners’ land. Registered quickly conveyed the land to Babs, Inc. (“Babs”), a third company under the control of the same developer, with a warrant by Babs to install the water and sewer facilities for the subdivision.

All these documents were recorded in the land records. Two years later, Babs entered into a contract with Cosle Contractors (“Cosle”) to build the water and sewer facilities for the subdivision. Babs then contracted to sell the land to Windward, a third party having no connection to the developer or to any of his companies. Windward assumed Babs’s contractual obligation to Cosle.

In the agreement of sale, Babs promised that, at Windward’s request made before settlement, Babs would release all obligations of record pertaining to the property, including the obligation of lot owners to pay a water and sewer charge. For reasons not explained, Windward failed to request a release before settlement. Windward paid Cosle to construct the water and sewer facilities and then conveyed the lots to a builder. Within two weeks, SF filed a “Declaration” in the land records that set forth a schedule for ultimate lot owners to follow to pay the water and sewer charges, which amounted to $28,500 annually for all the lots combined, for a period of 30 years.

Of course, ²⁷³ neither SF nor the developer, nor any of its related companies, had paid anything toward the cost of constructing the water and sewer facilities, or had any outstanding obligation to pay anything. Eventually, houses were built on the lots and were sold to the ultimate lot owners. Upon receiving their first bills for the annual water and sewer charge, the lot owners brought suit to clear title to their properties, arguing that the water and sewer charge was a cloud on their title. In the circuit court, they argued successfully that the Declaration was not a covenant running with the land.

This Court affirmed on appeal. We held that the language of the Deed and Agreement, stating that the obligation to pay the water and sewer charge would run with the land, was not a covenant running with the land. “[A] covenant or condition or burden does not attach to land conveyed merely by virtue of the words employed by the conveyancer.” 22 Md.App. at 102-03 , 322 A.2d 228 (citing Glenn v. Canby, 24 Md. 127, 130 (1866)). Rather, there must be a burden or benefit that touches and concerns the land and passes with the ownership of the land. “ ‘Ordinarily ... a covenant is regarded as touching and concerning the land if it is of value to the covenantee by reason of his occupation of the land or by reason of an easement which he has in the land, or if it is a burden on the covenantor by reason of his occupation of the land.’” Id. (quoting Tiffany, Real Property (3rd ed.) § 854, at 455).

Registered held the land in fee simple, and “[njothing it or [SF were] required to do, or refrain from doing, by the Deed and Agreement either benefitted or burdened its use, occupation, or enjoyment of the estate except collaterally, by virtue of its contractual obligation to subject subsequent grantees to the charges.” Id. at 103, 322 A.2d 228 (emphasis in original) (footnote omitted). “It would be difficult to conceive of a covenant more ‘personal’ in nature and therefore less capable of ‘running with and binding the land’ than this agreement by Registered to do nothing with respect to the use or enjoyment ²⁷⁴ of the property but only to establish facilities charges affecting remote grantees.” Id. at 104 , 322 A.2d 228 . In the case at bar, Saddlebrook and Utility, unlike Registered and SF, entered into a contract for construction of the water and sewer facilities in the Subdivision. Wilson built the water and sewer facilities, and Saddlebrook and Utility paid it to do so. This case resembles Chesapeake Ranch Club, Inc. v. C.R.C. United Members, Inc., 60 Md.App. 609 , 483 A.2d 1334 (1984), in which we held that a covenant by purchasers of lots in a subdivision to pay for the construction, maintenance, and repair of streets in the subdivision was a covenant that touched and concerned the land, and ran with the land.

In that case we said: “The test whether a covenant will or will not run with the land depends not so much on whether it is to be performed on the land itself as on whether it tends directly or necessarily to enhance its value or render it more beneficial or convenient to those by whom it is owned or occupied. Those covenants that are generally held to run with the land and to insure to the benefit of the assignee are such as ordinarily affect the land itself and confer a benefit on the grantor.” Id. at 616 , 483 A.2d 1334 (quoting 20 Am. Jur. 2d Covenants § 36 (1965 Cum. Supp. 1983) (footnotes