No Mechanics Lien after foreclosure auction in Maryland

Mechanics lien not valid in Maryland

REDLAND GENSTAR, INC. et al. v. HARDAT MAHASE et al.
No. 3071, September Term, 2002

Case Law
COURT OF SPECIAL APPEALS OF MARYLAND
155 Md. App. 72; 841 A.2d 413; 2004 Md. App. LEXIS 10

February 3, 2004, Filed

Facts: A corporation filed a petition in a Maryland court in June 1998, seeking a mechanic's lien on real property. A show cause hearing for an interlocutory lien was scheduled for August 5, 1998, but no lien was entered on that date. The property was sold at a foreclosure sale in November 1998, and in February 1999, title was transferred to a company that subsequently sold the property to several landowners. The corporation that filed the petition for a lien filed a motion for a final lien on May 12, 1999, and the circuit court issued an order granting the lien on May 24, 1999, the same day that a judgment approving the foreclosure sale was entered.

Issue: Was there mechanic’s lien even after the property was sold?

Ruling: None. The trial court properly ruled that the interest which the corporation acquired on May 24, 1999, was extinguished by ratification of the foreclosure sale. The earliest date to which appellant could have had an actual mechanic's lien on the Property was May 24, 1999, many months after the foreclosure sale on November 4, 1998. Thus, appellant is precluded from asserting an interest in the Property based solely on the existence of a lien.

Lesson Learned: Simply filing a mechanic's lien action does not create a subordinate interest in property. A mechanic's lien does not come into effect until the passage of a court order establishing a lien. An order is required to create the lien, making the land in question liable by statute to be seized and sold on execution. Moreover, no lien exists until after the owners of the property in question are provided with notice and an opportunity for a hearing.

Written by Kevin Levonas and Jerry L.