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USFN 25th Anniversary

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Ratification is Ratification

by Ronald S. Deutsch
Cohn, Goldberg & Deutsch, L.L.C. — USFN Member (DC)

On September 14, 2004, the Court of Special Appeals in Manigan v. Burson held that a mortgagor was not entitled to set aside a ratified sale of a foreclosed home, where the mortgagor only attacked the bank’s actions that led to the foreclosure and did not assert allegations relating to any intrinsic fraud of the sale.

The facts were that Bank of America held a mortgage on Manigan’s home.  In 1999, a dispute arose between the bank and Manigan as to whether her payments were current.  The dispute escalated into a foreclosure proceeding.  During the proceeding, Manigan filed a breach of contract suit against the bank, in part claiming that the bank’s claims were erroneous and were due to sloppy accounting practices.  Manigan also filed a motion to stay the foreclosure until the breach of contract action was resolve.

After a trial the court resolved all issues in favor of the bank.  Thereafter, a foreclosure sale was held, and a report of sale was filed with the court on December 17, 2002.  No exceptions were filed during the ratification period.  That is, the borrower was given notice indicating that the sale had taken place and would be ratified unless cause to the contrary was shown within thirty days.  On February 11, 2003, the court entered an order of ratification and referred the matter to an auditor.  On May 24, 2003, the purchaser moved for a writ of possession of the property.

The auditor’s report was filed on July 21, 2003, and on August 15, 2003, a hearing on the motion for writ of possession was held in trial court.  At that hearing, Manigan again attempted to argue that the bank had wrongfully accused her of being delinquent.  This argument was denied as being untimely, and from that ruling she appealed.

Under Maryland foreclosure procedures, plaintiffs are afforded two separate opportunities in which they may challenge the legality of foreclosure in a state court.  First under Rule 14-209(b), plaintiffs may seek prior to sale to enjoin the foreclosure.  Secondly, after the sale but before ratification, plaintiffs have the opportunity to file objections to the sale.  Although Manigan sought to enjoin the sale, she was not timely in filing exceptions to the sale before ratification.


Upon the court’s ratification of a sale, objections to the propriety of the foreclosure will no longer be entertained.  As the court of appeals has explained:

Sound public policy requires that no person shall in a judicial proceeding be deprived of a right or charged with a default until he has been given a full and free opportunity of being heard in respect thereto, but the complement of that rule is that where one is give that opportunity, and elects to stand mute and allow the decision to go against him without protest or objection, that he is bound by it.  There must of necessity be some end of litigation.


The law is firmly established in Maryland that the final ratification of the sale of property in foreclosure is res judicata (Latin term for “already adjudicated”) as to the validity of such sale, except in cases of fraud or illegality, and hence its regularity cannot be attacked in collateral proceedings.  An enrolled decree will not be vacated based on any untimely arguments of intrinsic fraud.  And Manigan did not argue extrinsic fraud, which can be a basis to set aside a ratified sale.

 

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