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Recent Maryland law affects short sales properties in condo and HOA communities
Effective October 1, 2011, a new law (HB 1246/SB 946) in Maryland establishes that condo and homeowner associations can place a limited priority lien on the unit with dues in arrears.  The lien is limited to 4 months of unpaid regular assessments for the common expenses or a maximum of $1,200.  The lien total can not include late fees, interest, attorney’s fees, and other charges.  The lien will take priority over all other liens except those imposed by government agencies.
This legislation will have an effect on short sales.
Although it is unlikely that all condo and homeowner associations will rush out to record these priority liens given the limitation on what can be included and a ceiling of how much, we will see some of them, and most likely condo associations, take advantage of this new law. 
As a short sale specialist in Maryland, I plan to use this new law to my clients’ advantage.  In a short sale situation, all liens, regardless of position, must be satisfied for clear title to transfer to the short sale buyer.  However, many lenders do not authorize payments for late fees from the proceeds of the short sale.  This may force the ... more

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