135 A.3d 909
Md. Ct. Spec. App.2016Background
- In 2007 Hood executed a $345,000 note secured by a deed of trust on their Harford County home; note interest was 6.805%.
- Appellants defaulted; substitute trustees began foreclosure in July 2013. Mediation and bankruptcy delayed sale; bankruptcy discharged debt but allowed sale to proceed.
- Notice of Sale (published Jan 2015) stated interest on any unpaid purchase price would accrue at 6.805% from sale date to settlement; no pre-sale objection was made.
- Property sold on January 21, 2015 to Fannie Mae for $490,005 (the highest bid). Trustees filed Report of Sale and purchaser affidavit; settlement did not immediately occur.
- On March 20, 2015 appellants filed post-sale exceptions solely arguing the trustee set an "excessive" interest rate (6.805% vs. alleged ~4% market), claiming it may have chilled bidding and reduced price; they proffered an expert opinion without supporting data.
- Trial court denied exceptions, ratified sale, citing timeliness, inappropriateness of raising the issue post-sale, and—alternatively—legal insufficiency; Court of Special Appeals affirmed on the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether objection to sale term (interest rate on unpaid purchase price) must be raised pre-sale under Rule 14-211 or may be raised as post-sale exceptions under Rule 14-305(d) | Hood: Interest-rate term depressed bidding; appropriate to raise as post-sale exception | Trustees: Objection should have been raised pre-sale by motion to enjoin/stay; alternatively, not a proper ground to upset sale | Court: Properly raised as exception under Rule 14-305(d); not a Rule 14-211 motion issue |
| Whether trustee abused discretion by setting 6.805% interest term, thereby invalidating sale | Hood: Trustee set a higher-than-market rate that likely discouraged bidders and lowered sale price | Trustees: Trustee may set sale terms; charging the note rate was permissible; lower rate could have reduced proceeds | Court: No proof of prejudice or that bidding was chilled; mere speculation insufficient—no abuse of discretion |
| Whether exceptions were timely or procedurally barred | Hood: Timeliness not dispositive; raised after sale as permitted by Rule 14-305(d) | Trustees: Untimely; should have been raised pre-sale under Rule 14-211 | Court: Erroneous to bar on timeliness grounds here; exceptions were an appropriate procedural vehicle, but they failed on the merits |
| Whether the sale price was inadequate such that court should order a resale | Hood: Higher price might have produced surplus funds to appellants | Trustees: Bid of $490,005 satisfied debt; no showing bid was unfair | Court: No evidence price was unfair or that resale would yield better result; courts reluctant to order resale absent assurance of better price |
Key Cases Cited
- Thomas v. Nadel, 427 Md. 441 (confirming known pre-sale defenses ordinarily must be raised before sale)
- Bates v. Cohn, 417 Md. 309 (Rule 14-305 is not a portal for all pre-sale objections as post-sale exceptions)
- Maddox v. Cohn, 424 Md. 379 (trustee’s duty to use diligence to obtain largest revenue; limits on discretion)
- Burson v. Capps, 440 Md. 328 (presumption that sale was fairly made; burden on attacker to prove invalidity and prejudice)
- 101 Geneva v. Wynn, 435 Md. 233 (trustee discretion in conducting sale and scope of exceptions)
- Busey v. Perkins, 168 Md. 453 (reluctance to order resale for inadequacy of price absent assurance of better result)