News

Mortgages Deemed Enforceable Despite Missing Affidavits

A recent court ruling affirmed the reach of Maryland’s “Curative Statute” to excuse certain missing formalities in the recordation of a lien on real property, though the long course of the litigation suggests lien creditors are better off getting it right the first time. 

Recently, deeds of trust, the mortgage-equivalent instruments used in Maryland to secure bank loans to home buyers, have been deemed enforceable, despite defective or missing affidavits of consideration.

Maryland law requires that every deed of trust contain an oath or affirmation by the lender, together with the filing of an affidavit to that effect, that the value received for the lien, as recited in the deed of trust, is true and bona fide. The issue of enforceability arose in the context of bankruptcy proceedings where the trustee for the estates of certain bankrupt debtors challenged the validity of bank deeds of trust that were missing affidavits of consideration.

The Maryland Court of Appeals, Maryland’s highest court, recently held that such deeds of trust remained enforceable because of Maryland’s “Curative Statute,” which “cures” or excuses a lack of compliance with certain formal requisites related to recorded instruments.  The Court of Appeals ruled that where a deed of trust is recorded without an affidavit of consideration, the defect is cured by Maryland’s Curative Statute if there is no judicial challenge to the validity of the deed of trust within six months.

While this recent decision provides relief to certain banks, it also highlights the need for creditors to remain vigilant in complying with the requirements in Maryland for establishing and perfecting liens.

For additional information please contact Vincent Guida at (410) 583-2400 or guida@bowie-jensen.com.

icon-location

210 W. Pennsylvania Avenue, Suite 400
Towson, Maryland 21204