Maryland HOA lien foreclosure: assessments only, never fines

Start with the declaration, because in Maryland an association lien is a creature of contract. Real Property § 14-202(a) creates a lien only if the recorded contract expressly provides for one and expressly describes both the party entitled to establish and enforce it and the property it may be imposed on. A Maryland declaration that is silent on liens gives the association no lien to record, and § 14-201(b) is what pulls a declaration into the Act in the first place by defining a contract as a real covenant running with the land or a recorded instrument. Read § 14-201(c)(1) closely on the next point: damages means unpaid sums due under the contract plus interest, "including fines levied under the Maryland Condominium Act or the Maryland Real Estate Time-Sharing Act." The Homeowners Association Act is not on that list, and consequential and punitive damages are excluded outright by § 14-201(c)(2).

The notice step is where most owners can still act. Under § 14-203(a)(1) the association has 2 years from the breach to serve written notice, by certified or registered mail with return receipt to the last known address or by personal delivery. Where neither works, § 14-203(a)(3) requires both a mailing to the last known address and a posting on the property in a conspicuous manner in the presence of a competent witness, and for a building the notice goes on the door or other front part. Section 14-203(b) sets seven contents the notice must carry, including the nature of the alleged breach, the amount of alleged damages, a description of the property identifying the counties it sits in, and an express statement that the owner has a right to a hearing.

The owner then has 30 days from service to file a complaint in the circuit court for the county holding any part of the property, attaching a copy of the notice and an affidavit stating facts that would preclude the lien, and may request a hearing at which any party may appear with evidence. Section 14-203(d) puts the burden of proof on the association, not the owner. The court imposes the lien only on a finding of probable cause, and § 14-203(g)(3) requires the order to state a bond amount the owner may file to get the lien off the property. Let the 30 days lapse and the association simply records without a judge ever looking at the file.

Timing after that is unusually tight for the association. Section 14-203(h)(2) lets the statement of lien be recorded 30 days after the court order, or 30 days after service where no complaint was filed, and § 14-203(h)(3) then gives 90 days: miss it, and unless the parties agree otherwise the association may not record at all and must run the entire notice process again. Priority dates from the filing of the statement of lien under § 14-203(h)(4), and § 14-203(i)(2) lets the court award costs and reasonable attorney’s fees to any party, which cuts both ways.

Foreclosure itself runs on mortgage rules. Section 14-204(a) enforces the lien in the same manner and subject to the same requirements as a mortgage or deed of trust containing a power of sale or assent to a decree, § 14-204(b) allows a deficiency suit in the same proceeding where the owner is personally liable, and § 14-204(c) kills the action 12 years after the statement of lien was recorded. Section 14-204(d)(3) is the sting in the tail of the fines limit: the association is barred from foreclosing over fines, not from collecting them, and may still sue for a money judgment, suspend privileges under its own documents, or wait for the sale of the lot.

One slice of the association debt does outrank a lender, and it is small. Real Property § 11B-117(c)(2) gives part of the lien priority over a first mortgage or first deed of trust recorded on or after October 1, 2011, but § 11B-117(c)(3) confines that part to not more than 4 months of unpaid regular assessments for common expenses, excludes interest, collection costs, late charges, fines, attorney’s fees and special assessments, and caps it at $1,200. The association loses even that if it ignores a first lienholder: under § 11B-117(c)(4)(iii), failing to give the holder written information about the priority portion within 30 days after the statement of lien is recorded strips the priority. Two things sit outside the whole scheme: § 11B-117(c)(1) preserves the priority of the Columbia Association annual charge under the Howard County declaration dated December 13, 1966, and of liens held by the State, a county, a municipal corporation or their units and instrumentalities, and § 14-205 keeps the Contract Lien Act away from land installment contracts, deeds of trust and mortgages.

The association sues in the circuit court for the county where the property sits, and the case is styled and tried like a mortgage foreclosure with a power of sale, so the owner is defending a sale rather than a collection suit. The three defences that actually work in Maryland are procedural. First, no lien clause in the declaration means no lien under § 14-202(a). Second, notice served more than 2 years after the breach, or missing one of the seven items in § 14-203(b), including the statement of the right to a hearing, is defective.

Third, and most often, the lien includes money § 14-204(d)(2) will not let it foreclose on: fines levied by the governing body, the attorney’s fees and costs of recovering those fines, or filing-related costs and fees larger than the delinquent assessments excluding interest. An owner who moves inside the 30-day window under § 14-203(c) shifts the burden of proof onto the association and can post the bond the court sets under § 14-203(g)(3) to clear the lien from the title while the fight runs. Winning does not end the debt: § 14-204(d)(3) preserves every other collection route, and § 14-203(i)(2) lets the court award costs and reasonable attorney’s fees to whichever side deserves them.