Trustees, Mortgagees, Attorneys and Foreclosure Bond - Maryland in All States
Table of Contents
Brief Summary
Every Maryland foreclosure sale needs this bond on file before the auction, and most substitute trustees only post the $25,000 default. The catch comes when a third party outbids the lender. Then the bond has to be raised to the full sale price before the court will ratify the sale. We write both the initial bond and the increase quickly, so a third party sale does not stall your ratification.
Maryland Rule 14-213 requires the individual authorized to sell property in a lien foreclosure, usually a substitute trustee, mortgagee or attorney, to file a bond to the State of Maryland before the sale. Unless the court orders otherwise, the bond is $25,000. If anyone other than the lienholder or its designee buys the property, the bond must be increased to the sale price shown in the report of sale before the sale is ratified.
We can help with all All States bonds!
How to Apply for a Trustees, Mortgagees, Attorneys and Foreclosure Bond:
- Identify the individual authorized to make the sale and the circuit court where the foreclosure is docketed.
- Have the case number, property address and lien holder name ready.
- Obtain the $25,000 bond, or the amount the court ordered, and file it before the sale.
- If a third party buys at auction, increase the bond to the sale price in the report of sale.
- File the increased bond before the court ratifies the sale.
Detailed Information About the All States Trustees, Mortgagees, Attorneys and Foreclosure Bond:
Two amounts, not one
Maryland Rule 14-213 sets a $25,000 bond as the default for every foreclosure sale of property subject to a lien. That figure covers the common case where the lender, or someone the lender designates in a writing filed in the case, takes the property back at auction.
If the property goes to anyone else, the rule requires the person who made the sale to increase the bond to the full sale price stated in the report of sale. This has to happen before the circuit court ratifies the sale. On a $300,000 third party sale, the bond goes from $25,000 to $300,000. Trustees who forget the increase hold up ratification.
The court can also raise or lower the amount under Rule 1-402(d), either on its own order or when someone with an interest in the property, or the person making the sale, asks.
Who posts it
The bond is filed by the individual authorized to make the sale. Under Rule 14-214, only an individual may sell property under the foreclosure rules. In practice that means substitute trustees under a deed of trust, a mortgagee or its attorney under a power of sale, or the person named under an assent to a decree.
What the bond guarantees
The bond runs to the State of Maryland. It is conditioned on the seller complying with any court order entered about the sale of the property or the distribution of the sale proceeds. If the seller mishandles the proceeds or ignores the court's orders, an injured party can pursue the bond, and the surety pays up to the bond amount before seeking repayment from the seller.
Cost
The premium is a percentage of the bond amount. The surety looks at the seller's credit, experience and, for law firms, the firm's financial condition. A $25,000 default bond costs far less than an increased bond on a large third party sale. Confirm the current form and filing steps with the clerk of the circuit court where the foreclosure is docketed before the bond is issued.
Eligibility and Requirements for an All States Trustees, Mortgagees, Attorneys and Foreclosure Bond:
- Bond payable to the State of Maryland.
- Conditioned on compliance with court orders about the sale and distribution of proceeds.
- $25,000 unless the court orders a different amount.
- Increase to the full sale price when the buyer is not the lienholder or its written designee.
- Credit review of the individual making the sale, and firm financials for larger amounts.
All States Trustees, Mortgagees, Attorneys and Foreclosure Bond FAQs:
Rule 14-213 sets it at $25,000 unless the court orders otherwise. If the property sells to someone other than the lienholder or its designee, the bond must be raised to the sale price before ratification.
The initial bond must be filed before the property is sold. Any required increase must be filed before the court ratifies the sale.
Yes. A person with an interest in the property, or the individual making the sale, can ask the court to increase or decrease the bond under Rule 1-402(d).
The State of Maryland. The bond protects parties harmed if the seller fails to follow court orders on the sale or the distribution of proceeds.
It is a percentage of the bond amount. The rate depends on the seller's credit and track record. Increased bonds on third party sales cost more because the amount is larger.
