North Star Properties v. Nadel ( 2021 )

North Star Properties, LLC v. Jeffrey Nadel, et al., No. 831, Sept. Term 2020. Opinion by
Alpert, J.
REAL PROPERTY – FORECLOSURE – POST-SALE INTEREST AND TAXES –
ABATEMENT – JUDICIAL STAY DURING COVID-19 PANDEMIC
As a matter of contract and convention, foreclosure sale purchasers who deposit a
portion of the purchase price commonly “pay interest upon the unpaid balance for the
period between the time fixed for settlement and the date of the actual settlement” and pay
property taxes from the date of the sale. See Donald v. Chaney, 302 Md. 465, 477 (1985);
AMT Homes, LLC v. Fishman, 228 Md. App. 302, 310 (2015). Here, ratification of the
sale was delayed after the Chief Judge of the Court of Appeals of Maryland temporarily
stayed pending foreclosure proceedings during the COVID-19 pandemic. Although
equitable relief from the contract terms allocating responsibility for post-sale interest and
taxes may be warranted when delayed ratification is “caused by the conduct of other
persons beyond the power of the purchaser to control or ameliorate[]” Donald, 302 Md. at
477, neither the court, nor the Chief Judge is a “person” for that purpose. Applying lessons
from AMT Homes, 228 Md. App. at 312, holding that a foreclosure purchaser was “not
entitled to a reduction in the . . . payments it promised to pay simply because the court
exercised its oversight role over a longer-than-ideal period of time” due to a court backlog,
we conclude that the Circuit Court for Prince George’s County did not err or abuse its
discretion in denying the foreclosure purchaser’s motion to abate interest and taxes based
on the delay in ratification caused by the public health emergency stay.
Circuit Court for Prince George’s County
Case No.: CAEF 1839183
REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 831
September Term, 2020
______________________________________
NORTH STAR PROPERTIES, LLC
v.
JEFFREY NADEL, ET AL.
______________________________________
Kehoe,
Arthur,
Alpert, Paul E.
(Senior Judge, Specially Assigned),
JJ.
______________________________________
Opinion by Alpert, J.
______________________________________
Filed: November 19, 2021
Pursuant to Maryland Uniform Electronic Legal
Materials Act
(§§ 10-1601 et seq. of the State Government Article) this document is authentic.
2021-11-19 14:19-05:00
Suzanne C. Johnson, Clerk
As a matter of contract and convention, foreclosure sale purchasers who deposit a
portion of the purchase price commonly “pay interest upon the unpaid balance for the
period between the time fixed for settlement and the date of actual settlement” and pay
property taxes from the date of the sale. See Donald v. Chaney, 302 Md. 465, 477 (1985);
AMT Homes, LLC v. Fishman, 228 Md. App. 302, 310 (2016). Yet if ratification of the
sale or the ensuing settlement is delayed, the Court of Appeals has held that equitable
exceptions may be warranted under certain circumstances, including when the delay is
“caused by the conduct of other persons beyond the power of the purchaser to control or
ameliorate.” Donald, 302 Md. at 477.
In this appeal, we are asked to hold that the Circuit Court for Prince George’s
County erred or abused its discretion in refusing to abate post-sale interest and taxes under
this exception, after the Chief Judge of the Court of Appeals of Maryland temporarily
stayed pending foreclosure proceedings during the COVID-19 pandemic. We decline to
do so. Applying lessons from AMT Homes, 228 Md. App. at 312, holding that a foreclosure
purchaser was “not entitled to a reduction in the . . . payments it promised to pay simply
because the court exercised its oversight role over a longer-than-ideal period of time” due
to a court backlog, we conclude that the circuit court did not err or abuse its discretion in
denying the motion of North Star Properties, LLC (“North Star”), appellant, to abate
interest and taxes based on the public health emergency stay.
BACKGROUND
At a foreclosure sale conducted on February 25, 2020, Sukhpal Singh and Rajwant
S. Virk jointly purchased 901 Park Terrace, Fort Washington, Maryland 20744 (the
“Property”) for $222,000. During the course of the foreclosure proceedings, North Star
was substituted for Singh and Virk as the foreclosure purchaser. For convenience, we shall
refer to North Star as the Foreclosure Purchaser, and to Jeffrey Nadel and the other
substitute trustees collectively as the Substitute Trustees.1
The Foreclosure Purchaser deposited $46,000. In pertinent part, the Contract of
Sale for the Property provides:
Balance of the purchase price to be paid in cash within ten days of final
ratification of sale by the Circuit Court for Prince George’s County, time
being of the essence for purchaser. In the event that settlement does not occur
within the said ten days, the purchaser shall be in default. . . . Interest to be
paid on the purchase money less the stated deposit called for herein, at the
rate pursuant to the Deed of Trust Note from the date of auction to the date
funds are received in the office of the Substitute Trustee. There shall be no
abatement of interest due from the purchaser in the event additional funds
are tendered before settlement or if settlement is delayed for any reason,
including but not limited to exceptions to sale, bankruptcy filings by
interested parties, Court administration of the foreclosure or unknown title
defects. All taxes . . . are to be adjusted to the date of auction and thereafter
are to be assumed by the purchaser.
(Emphasis added.)
On March 18, 2020, Mary Ellen Barbera, then Chief Judge of the Court of Appeals
of Maryland, issued an “Administrative Order on Suspension of Foreclosures and Evictions
during the COVID-19 Emergency” that was “effective immediately[.]” See
https://mdcourts.gov/sites/default/files/adminorders/20200316restrictedoperationsduetoco
vid19.pdf. The order stayed all “foreclosures of residential properties . . . pending in the
circuit courts[.]”
1
The Substitute Trustees, appellees, are Jeffrey Nadel, Scott Nadel, Daniel
Menchel, and Doreen Strothman.
2
On April 20, 2020, the Foreclosure Purchaser filed a Motion to Abate and Limit
Interest, seeking to reduce both post-sale interest and taxes on the Property. Citing the
Chief Judge’s order, the Foreclosure Purchaser argued that because the “unforeseen stay
of proceedings that was a response to the COVID-19 pandemic” differs from a foreseeable
“court back log[,]” it “would be inequitable and contrary to the holdings and spirit of
existing case law” to make foreclosure purchasers “responsible for all interest and real
property taxes from the date of the foreclosure sale up to the date of settlement.” The
Foreclosure Purchaser acknowledged that in these circumstances, requesting abatement
was “tantamount to requesting a reallocation of costs” because it “would fully shift the
additional costs from the foreclosure purchaser to the lender[,]” but argued that the
COVID-19 stay “was not reasonably foreseeable and is not of the type a foreclosure
purchaser could or should have been aware of at the time of its bid.”
The Substitute Trustees responded that the “standard language” in the Contract of
Sale expressly precludes such abatement regardless of the reason for any delay in
ratification. They argued that this pandemic-related delay “is most closely analogous to
where the delay is caused by Court review[,]” which under AMT Homes, 228 Md. App. at
313, “‘falls within the universe of risks properly allocated to purchasers, and [a] cost of
doing business[.]’” Furthermore, the Foreclosure Purchaser cited “no authority for abating
real estate taxes.”
In reply, the Foreclosure Purchaser argued that AMT Homes is distinguishable
because the delay at issue in that case was in the “lower court review process that included
the ratification of the sale[,]” whereas this delay in the foreclosure process was caused by
3
the Chief Judge’s order staying all foreclosure proceedings. In the Foreclosure Purchaser’s
view, the pandemic-related delay was no different “than a delay caused [by] a neglectful
trustee, a properly brought appeal or the frivolous filings by a party defendant, all of which
are recognized bases for abatement[,]” because the court was “impeded from fulfilling its
review obligations due to conduct of another party without fault of the foreclosure
purchaser.”
On June 3, 2020, Chief Judge Barbera issued an amended order lifting the stay on
residential foreclosure proceedings, effective July 25, 2020. See
https://www.mdcourts.gov/sites/default/files/adminorders/20200603amendedliftingsuspe
nsionduringcovidofforeclosuresevictionsandotherejectmentsinvolvingresidences.pdf.
By written order entered August 31, 2020, the circuit court denied the Foreclosure
Purchaser’s motion for abatement. The court concluded that “the delay in ratifying the sale
was due to an unprecedented pandemic and through no fault of any party[,]” so that abating
post-sale taxes would reallocate the “well-known” responsibility that “frames everyone’s
expectations.” See AMT Homes, 228 Md. App. at 310. The court also concluded that it
did not have jurisdiction to reallocate tax obligations to “the original homeowner” under
these circumstances.
The Foreclosure Purchaser moved to alter or amend the order, arguing that the
“[c]ourt only ruled on Foreclosure Purchaser’s request to abate real property tax and did
not rule on Foreclosure Purchaser’s request to abate interest.” In response, the Substitute
Trustees, again invoking the decision and reasoning in AMT Homes, pointed to the
4
language in the Contract of Sale to argue that if the Foreclosure Purchaser did not accept
those terms, it “could have chosen not to bid at the sale.”
By written order entered September 16, 2020, the circuit court denied the motion to
alter or amend. Clarifying its earlier order, the court applied the same principles governing
allocation of post-sale tax responsibility to post-sale interest. In addition, the court
concluded that under AMT Homes, a “court is not deemed a ‘person beyond the power of
the purchaser to control or ameliorate’” (quoting AMT Homes, 228 Md. App. at 311).
On September 24, 2020, the court entered an order ratifying the foreclosure sale.
The Foreclosure Purchaser noted this timely appeal on October 9, 2020, presenting five
questions that we consolidate and address collectively, to determine whether the circuit
court erred or abused its discretion in denying abatement based on the pandemic stay on
foreclosure proceedings.2 See generally Huertas v. Ward, 248 Md. App. 187, 205 (2020)
2
In its brief, North Star presents the following questions:
1. Did the Circuit Court abuse its discretion in denying Appellant’s Motion
to Abate and Limit Interest and Real Property Taxes filed with the Circuit
Court on April 20, 2020 and Appellant’s Motion to Alter o[r] Amend
Judgment Pursuant to Maryland Rule 2-534 filed with the Circuit Court
on September 3, 2020[?]
2. Did the Circuit Court abuse its discretion when it failed to rule the court
is not a “person beyond the power of the purchaser to control or
ameliorate within the context of the facts presented in this case”[?]
3. Did the Circuit Court abuse its discretion when it did not consider the
equities at all and declined to exercise its discretion[?]
(continued…)
5
(“an order ratifying a foreclosure sale is a final judgment as to any rights in the real
property, even if the order refers the matter to an auditor to state an account”).
STANDARD OF REVIEW
“Whether to abate the payment of interest by a [foreclosure sale] purchaser . . . is a
decision entrusted to the discretion of the hearing judge.” Thomas v. Dore, 183 Md. App.
388, 405 (2008). See Baltrotsky v. Kugler, 395 Md. 468, 480-81 (2006). This standard
also applies to a foreclosure purchaser’s request for abatement of post-sale taxes. Cf. AMT
Homes, 228 Md. App. at 311 (“declin[ing] to reallocate responsibility for interest and taxes
when the delay results from judicial backlogs”). “Although we review de novo the legal
standard that the court applied, we review the court’s decision to deny abatement . . . under
‘the familiar abuse of discretion standard.’” Id. at 308 (citation omitted). See Baltrotsky,
395 Md. at 477 n.7. We therefore ask if the challenged decision “‘either does not logically
follow from the findings upon which it supposedly rests or has no reasonable relationship
to its announced objective.’” Zorzit v. 915 W. 36th Street, LLC, 197 Md. App. 91, 97
(2011) (quoting North v. North, 102 Md. App. 1, 14 (1994)).
4. Did the Circuit Court abuse its discretion when it ruled that reallocation
of real property taxes was not within the Circuit Court’s jurisdiction[?]
5. Did the Circuit Court abuse its discretion when the order denying
Appellant’s request to abate interest and real property taxes did not
address whether Appellant was afforded its right to a timely decision[?]
6
DISCUSSION
As grounds for abating both post-sale interest and property taxes, the Foreclosure
Purchaser cites to “Executive and administrative orders issued through the State of
Maryland—commencing with the March 18, 2020, emergency order signed by” then Chief
Judge Mary Ellen Barbera, staying “all pending residential foreclosures[.]” The
Foreclosure Purchaser emphasizes the “novel set of facts not seen in any reported case; to
wit: a delay caused by administrative orders entered in response to the COVID-19
pandemic that entirely closed off access to the judicial system for the type of proceedings
needed to complete the transactions and thereafter limited and qualified the proceedings.”
(Italics in original.) In the Foreclosure Purchaser’s view, the Chief Judge’s stay orders
effectively “frustrated” the parties’ “basic assumption that come the settlement day, the
court would be open to process the settlement.”
In these circumstances, the Foreclosure Purchaser argues that “an equitable revision
of a term of the contract” was warranted under the “recognized exception” for delay
“caused by the conduct of other persons beyond the power of the purchaser to control or
ameliorate.” Donald, 302 Md. at 477. The Foreclosure Purchaser contends that the circuit
court failed to properly exercise its discretion when it declined to abate post-sale interest
and taxes that accrued as pending foreclosure proceedings were stayed temporarily by court
order during the COVID-19 emergency.
With respect to post-sale interest, the Substitute Trustees respond that the
Foreclosure Purchaser “did not demonstrate the necessary elements under existing case
law” or “any compelling equity” that would warrant a decision “to shift costs to the lender
7
or former owner.” Arguing that “[t]his situation is not due to a catch-all ‘other persons’
under [Donald v.] Chaney[,]” the Substitute Trustees contend that any “delay in ratification
caused by the Pandemic and resulting court closures and delays are, as a practical matter,
indistinguishable from delay caused by the AMT Court backlog[,]” because “[n]either
could have been anticipated in advance[.]” As for abatement of property taxes, the
Substitute Trustees point out that the Foreclosure Purchaser proffers “no authority” for
such an abatement and that, in any event, the delay in settlement did not cause the
Foreclosure Purchaser to pay “additional taxes [it] would not have otherwise had to pay.”3
We agree with the Substitute Trustees that the circuit court properly exercised its
discretion in denying the Foreclosure Purchaser’s motion to abate interest and taxes that
accrued following the foreclosure sale. As the parties acknowledge, “[i]n ordinary
circumstances and in the absence of special provisions in the sale offer,” a foreclosure
purchaser may not be “discharge[d] . . . from the obligation to pay interest from the date
fixed for settlement by the terms of sale until a delayed settlement date.” Donald, 302 Md.
at 477-78. See also AMT Homes, 228 Md. App. at 309-10. The Court of Appeals has
recognized three exceptions to this general rule:
3
The Substitute Trustees also contend there is no equitable basis for abating interest
or taxes, because even after the judicial stay on foreclosure proceedings was lifted on July
25, 2020, the Foreclosure Purchaser “delayed their own settlement from August, 2020
through at least May, 2021, a span of nine months, without any apparent ill effect[.]” In
these circumstances, the Substitute Trustees argue, the Foreclosure Purchaser could not
have been “unduly harmed” by judicial stay. We do not address this contention because it
rests on allegations regarding post-ruling events, for which the Substitute Trustees offer no
citation to the record. See Md. Rule 8-504(a)(4) (“Reference shall be made to the pages of
the record extract supporting the assertions.”)
8
[A] purchaser at a judicial sale will be excused from [the] requirement to pay
interest upon the unpaid balance for the period between the time fixed for
settlement and the date of actual settlement only when the delay stems from
neglect on the part of the trustee; was caused by necessary appellate review
of lower court determinations[;] or was caused by the conduct of other
persons beyond the power of the purchaser to control or ameliorate.
Donald, 302 Md. at 477 (emphasis added; citations omitted).
At issue here is the third exception, for unavoidable delay caused by “the conduct
of other persons[.]” Id. As in this case, many of the decisions comprising the Maryland
jurisprudence on this exception involved a foreclosure sale made under a contract that
allocates responsibility for post-sale interest and taxes to the purchaser and prohibits
abatement. See generally Zorzit, 197 Md. App. at 106 (“the terms set forth in an
advertisement of a foreclosure sale, unless modified by an announcement made at the sale,
become the terms of the contract when the sale is ratified by the trial court”). Significantly,
in all but one of these cases, the settlement delay was caused by a mortgagor or former
owner, seeking to impede the foreclosure proceedings. Cf. Baltrotsky, 395 Md. at 481(holding that former property owner’s efforts to void the sale through filing “persistent and
monotonous pleadings” was “conduct of other persons” for abatement purposes); Zorzit,
197 Md. App. at 108-09 (holding that former property owners’ use of “legal process to
delay the final ratification” for 77 days constituted “conduct of other persons” for
abatement purposes). See generally AMT Homes, 228 Md. App. at 311 (citing Baltrotsky
and Zorzit as examples of “former owners” whose conduct, as opposed to “the conduct of
either party to the sale (or, for that matter, the court itself),” was the delaying behavior that
“put the case into interest-abating territory”).
9
AMT Homes is the only reported Maryland case involving settlement delay caused
by judicial operations, rather than by another person interested in the foreclosure
proceedings. We agree with the circuit court and the Substitute Trustees that in the
circumstances presented by this case, our review is guided by that decision and rationale.
In AMT Homes, 228 Md. App. at 308-09, 312-13, this Court applied the principles
articulated in Donald to a foreclosure settlement delayed by a backlogged court calendar,
which prevented ratification within the 60-day period contemplated by Md. Rule 14-305.4
We rejected the foreclosure purchaser’s argument that interest accruing after that 60-day
period should be abated under an exception for delay “due to no fault of the purchaser,”
instead concluding that the rule does not establish a presumptive period within which
ratification should reasonably be expected to occur. See id. at 308, 312-13.
Of direct importance to this appeal, we held that the circuit court did not err or abuse
its discretion in declining to abate the foreclosure purchaser’s obligation to pay post-sale
interest and taxes when doing so would shift that obligation to another party who also had
no control over the court’s calendar. See id. at 310-11. Considering both the consequences
and the public policy of abating a foreclosure purchaser’s interest and tax obligations based
solely on the impact of court-related delay in ratification, Judge Nazarian explained for this
Court why foreclosure purchasers should bear the risk of any delay in judicial review:
4
As we explained in AMT Homes, 228 Md. App. at 312-13, this rule “requires that
the [foreclosure] sale ‘be ratified unless cause to the contrary is shown within thirty days
after the date of notice’” reporting the sale, so “that ‘the process of achieving final
ratification after the foreclosure sale would have been accomplished . . . within the 60 days
as contemplated by the rules.’” (Citation omitted.)
10
Foreclosures, and the ensuing sales, involve three parties in interest.
First, of course, is the debtor, who owes an unpaid debt, both principal and
interest, and holds title to the property. Second is the lender, who has the
right to collect the debt and forecloses on the property as a remedy for the
debtor’s failure to pay. Third is the purchaser, who agrees to buy the property
from the debtor through the foreclosure sale process. The debtor’s and
lender’s rights and obligations vis-à-vis each other, including the debtor’s
obligation to pay interest and the lender’s right to receive it, are set forth in
the documents that memorialize the debt. See, e.g., Anderson v. Burson, 424
Md. 232, 235-36 (2011). The purchaser’s rights are defined by the law
governing foreclosures and the notices setting forth the terms of the
foreclosure sale. Simard v. White, 383 Md. 257, 310 (2004).
Generally speaking, debtors owe interest to their lenders (and taxes to
the government) up until the time of the sale, at which point the purchaser
takes responsibility. Outside the context of foreclosures, the sale is
consummated at settlement. In the foreclosure context, however, there is one
additional step: the court still needs to ratify the sale, and the debt isn’t
cleared until after that occurs, even though the purchaser takes equitable title
at the time of the sale. And the possibility that court review might extend
longer than sixty days is a risk that falls on the purchaser in a foreclosure
sale. As equitable owner of the property, the purchaser should bear the risk
associated with judicial review. See Donald, 302 Md. at 469 (explaining that
at the time of sale, the purchaser receives “an inchoate and equitable title
which becomes complete by ratification of the Court.”). With the benefits of
equitable ownership come its obligations, one of which is that the purchaser
pays interest from the time of sale. See id. at 468 (“It is a general rule as to
sales under decrees of this Court, that the purchaser always pays interest,
according to the terms of the decree, from the day of sale, whether he gets
possession or not.” (quoting Brown v. Wallace, 2 Bland 585, 594 (1830)).
Whether or not it’s fair—and reasonable people might disagree—this
allocation of costs and responsibilities is well-known and frames everyone’s
expectations. Purchasers know when they decide whether to bid at a sale
that if they win, they will be on the hook for interest and taxes from that point
forward. Presumably, and especially frequent and sophisticated participants
like AMT, purchasers calibrate their bids to reflect their prospective interest
and tax liability. And although the term “abatement” suggests that the
liability at issue here would disappear altogether, it doesn’t—lenders will still
be owed the unpaid interest and taxes, and will look to debtors (who would
seem less able to pay) to recover.
The question, then, is less about eliminating an unfair obligation than
about deciding whether it should be shifted to another party.
11
Id. at 309-10 (emphasis added; footnotes omitted).
This Court rejected the foreclosure purchaser’s argument that the judicial delay
warranted abatement under the equitable exception for delay “caused by the conduct of
other persons beyond the power of the purchaser to control or ameliorate[,]” because
“courts are obliged to provide relief to purchasers when ratification goes beyond a
‘reasonable time,’ which [those purchasers] define[d] as sixty days.” Id. at 311 (citing
Donald, 302 Md. at 477). In doing so, we also foreclosed treatment of the circuit court as
an “other person” that should be accountable for such delay:
We decline to reallocate responsibility for interest and taxes when the
delay results from judicial backlogs, and especially to declare sixty days (or
any other time period) as the presumptive point past which a delay is
“reasonable.” AMT has not cited, and we have not found, any authority for
the proposition that a court is a “person[ ] beyond the power of the
purchaser to control or ameliorate.” And when courts have abated interest
payments, those decisions have been grounded in the behavior of the former
owners.
* * *
AMT tries to shoehorn the court itself into the “conduct of other
persons” exception by relying on case law recognizing the circuit court as
the vendor of property in a judicial sale. See Greentree Series V, Inc. v.
Hofmeister, 222 Md. App. 557, 566 (2015) (explaining that in a judicial sale,
the court is the vendor, and the “contract of sale is a transaction between the
court as vendor, and the purchaser . . .” (quoting White v. Simard, 152 Md.
App. 229, 241 (2003), aff’d 383 Md. 257 (2004))). If the court is the true
seller of the property, the argument goes, it may not impose upon the
purchaser a cost that accrued because of its own delay.
This argument fails, however, because the court’s role in a foreclosure
sale is fundamentally different than that of a private seller. While the court
functions similarly to a private seller in many ways, see id. at 566-67(“Before ratification the transaction is merely an offer to purchase which has
not been accepted.”), Title 14 of the Maryland Rules charges the court with
a layer of oversight that a normal private seller wouldn’t have. That is, the
12
court must hear any exceptions to the sale and may only ratify it if it decides
the sale was fairly and properly made. Md. Rule 14-305(e). It was AMT’s
duty, as purchaser, to “assure the court that [it was] ready, willing and able
to comply with the terms fixed for its completion.” Donald, 302 Md. at 478.
AMT is not entitled to a reduction in the interest payments it promised to pay
simply because the court exercised its oversight role over a longer-than-ideal
period of time.
Certainly, AMT has the right to a timely decision, but it would not be
appropriate for us to establish a rigid time limit . . . that imposes financial
consequences on another party that also has no control over the delay.
Id. at 311-12 (emphasis added). Instead, we concluded that “[t]he delay in the court’s
ability to consider the sale, although regrettable, falls within the universe of risks properly
allocated to purchasers, and a cost of doing business in this space.” Id. at 313.
Like the circuit court, we shall apply the rulings and reasoning articulated in Donald
and AMT Homes to the record before us. Despite the novel circumstances presented by
this case, where ratification was delayed by a judicial stay imposed during a public health
emergency, we discern no legal or equitable reason to depart from these principles.
Although delay in judicial review caused by the “conduct of other persons” may
warrant abatement in certain circumstances, this Foreclosure Purchaser expressly agreed
in the Contract of Sale that interest would not be abated “for any reason, including but not
limited to . . . Court administration of the foreclosure[.]” Similarly, the Foreclosure
Purchaser expressly agreed that “[a]ll taxes . . . are to be adjusted to the date of auction,
and thereafter are to be assumed by the purchaser.” Based on the established precedent
and policy articulated in AMT Homes, this contract language allocates the risk and
responsibility for post-sale interest and taxes to the Foreclosure Purchaser, even if judicial
13
review were to be delayed because of court-related circumstances beyond the control of
any party to the foreclosure proceedings.
We are not persuaded that the circuit court abused its discretion in failing to treat
the novel circumstances surrounding the COVID-19 stay orders as an equitable basis for
reallocating those responsibilities. Instead, we reaffirm that a foreclosure purchaser is not
“entitled to a reduction in the interest payments it promised to pay simply because the court
exercised its oversight role over a longer-than-ideal period of time.” Id. at 312. As “is
well-known and frames everyone’s expectations[,]” based on both precedent and contract
terms, the post-sale responsibility for interest and taxes belongs to the foreclosure
purchaser, even when ratification and settlement is delayed because of temporary
restrictions on court operations. See id. at 310-11. Whether caused by a court-specific
backlog or by a judiciary-wide stay in response to a public emergency, such delay may be
beyond the foreclosure purchaser’s control, but it is not caused by the “conduct of other
persons” so as to warrant abating the foreclosure purchaser’s responsibility for interest and
taxes. For the same reasons we held in AMT Homes that the court itself is not a “person[]
beyond the power of the purchaser to control or ameliorate[,]” id. at 311, neither is the
Chief Judge, acting in her capacity as the administrator of our Judiciary, a person whose
conduct warranted abatement.
Consequently, we agree with the circuit court that the Chief Judge’s orders staying
pending foreclosure proceedings, from March 18 through July 25, 2020, do not constitute
delay caused by the conduct of other persons affected by the foreclosure proceedings,
which is the type of unavoidable delay contemplated by Donald and AMT Homes. In our
14
view, such delay in judicial review resulting from neutral conditions affecting judicial
operations – whether caused by the court-wide backlog in AMT Homes or by the pandemic-
related stay effective judiciary-wide in this case – does not warrant equitable relief from a
foreclosure purchaser’s contractual obligation to pay interest and taxes.
As the Foreclosure Purchaser admits, abating post-sale interest “would fully shift
the additional costs from the foreclosure purchaser to the lender[,]” even though the lender
also had “no control over the delay” and contracted away the risk of a court-related delay
in judicial review. See id. at 312. Here, the Foreclosure Purchaser knew that it would owe
more in interest if there was any court-related delay in ratification. The Foreclosure
Purchaser weighed that fully disclosed risk, presumably aware that any increase in interest
attributable to delayed ratification could be offset, in whole or in part, by an increase in the
value of the Property during the period of delay.5 That was a risk-reward bargain that “falls
within the universe of risks properly allocated to purchasers, and a cost of doing business
in this space.” Id. at 313.
Likewise, with respect to abatement of taxes on the Property, we agree with the
circuit court that there is no legal or factual justification for shifting responsibility from the
5
In this instance, on February 25, 2020, with a deposit of $46,000, the Foreclosure
Purchaser agreed to pay $222,000 for Property that was appreciating in value pending
ratification on September 24, 2020. As the Substitute Trustees point out, the Property is
reported as having been sold in January 2021 for $365,000. See
https://www.realtor.com/realestateandhomes-detail/901-Park-Ter_Fort-
Washington_MD_20744_M57480-61098 (last accessed Oct. 18, 2021). At the same time,
the post-sale interest and tax costs on the Property totaled $6,560.14, according to the Court
Auditor’s account of an audit dated January 7, 2021, and ratified on January 22, 2021,
showing $5,039.00 in post-sale interest and $1,521.14 in post-sale taxes.
15
Foreclosure Purchaser, who agreed to pay taxes on the Property from the sale date. See id.
at 312-13. We have not been cited to any precedent reducing taxes based on the “conduct
of other persons” exception. Applying the same principles governing abatement of post-
sale interest, we decline to reallocate responsibility for post-sale taxes when the delay in
ratification results from such judicial stay orders. Cf. id. at 311 (“We decline to reallocate
responsibility for interest and taxes when the delay results from judicial backlogs”).
For these reasons, the circuit court did not err or abuse its discretion in declining to
abate the Foreclosure Purchaser’s obligation to pay post-sale interest and taxes based on
the temporary judicial stay on pending foreclosure proceedings during the COVID-19
public health emergency.
JUDGMENT OF THE CIRCUIT COURT
FOR PRINCE GEORGE’S COUNTY
AFFIRMED. COSTS TO BE PAID BY
APPELLANT.
16