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David J. S imard v. E lizabeth A. W hite, et al. No. 96, September Term, 2003 Headnote: The proposition that a defaulting purchaser at a mortgage foreclosure sale is entitled to receiv e the ex cess fu nds, ( i.e., the difference of the bid price at a resale above the bid price at the original sale) from a resale of the property is not the com mon-law of Ma ryland. A def aulting purc haser norm ally will not be entitled to reim burseme nt for impro vements a nd/or repairs to the property absent fraud or extraordinary circumstances.

Circuit Co urt for Prince George 's County Case #CAE99-04205

IN THE COURT OF APPEALS OF MARYLAND No. 96 September Term, 2003

David J. Simard

v. Elizab eth A. W hite, et al.

Bell, C.J. Raker Wilner Cathell Harrell Battaglia Eldridge, John C. (retired, specially assigned), JJ.

Opinion by Cathell, J.

Filed: October 7, 2004

This case arises out of conflicting claims to the excess funds1 resulting from a resale after a purcha ser d efau lted i n a prior f orec losu re pr ocee ding in respec t to prope rty located in Prin ce G eorg e's C ounty. 2 David J. Simard, petitioner, the original and subsequent purchaser, challenges a Court of Special Appeals' decision allowing the contractual waiver of petitioner's alleged common-law entitlement to the excess of proceeds from a property's resale. Elizabeth A. White, Nancy P. Regelin and Patrick M. Martyn (hereinafter, the "Trustees"), together with Washington Mutual Bank, FA, a successor to Home Savings of America, F.S.B. (hereinafter, the "Len der"), the h olde r of a note secu red b y a Deed of Trust from Theodore B. McCann are the respondents. 3 The interm ediate appe llate court's decision overturned the decision of the Circuit Court for Prince George's County, which had sustained petitioner's exceptions to an Audito r's Rep ort follo wing th e resale of the p roperty. See Wh ite v. Simard , 152 Md. A pp. 229, 831 A .2d 517 (2003). Petitioner filed a Petition for Writ of Certiorari and this Court granted it on December 18, 2003. Simard v . White , 378 Md. 617, 837 A.2d 928 (2003). The sole question petitioner initially presented for our review asks:
1

By excess funds or excess proceeds, we mean, under the circumstances of this case, the difference resulting from a higher bid at the resale than the bid at the initial sale. We use "surplus funds" o r "surplus p roceeds" to denote the positive difference, if any, between the price at the fo reclosure sa le(s) and the o utstanding lie n instrume nt debt. The lien instrument was a deed of trust containing a power of sale. Th e foreclosure proceedin gs were c onducted under the p ower of sale. We sh all use the terms deed of trust and mortgage interchang eably through out, althoug h, as we ex plain later, there is a difference. That d ifferen ce doe s not af fect the issues in this partic ular cas e. Hereinafter, the Trustees and the Lender w ill be sometim es collectively ref erred to as respondents.
3 2

"Whether parties to a pow er of sale foreclosure may `contract out' the common law rule that the defaulting purchaser is entitled to any surplus proceeds of resale by placing such a provision in the advertisement of sale?"[4] We hold that the supposed right of a defaulting purchaser to receive the excess proceeds from the resale of the property is not the common-law of this State. For that reason, we need not resolve petitioner's original question. After the initial briefing and oral arg ument, the C ourt sched uled additional oral argument and requested the parties to brief and address two additional questions proposed by the Court. They were: 1. Should the [alleged 5 ] common-law rule that a defaulting purchaser at a mortgage foreclosu re sale is entitled to any surplus proceeds resulting from a resale caused by the default, be modified or abolished? 2. If that rule is modified or abolished, and a surplus res ults at a secon d sale after a default, should the court otherwise have authority to reimburse the defaulting purchaser from the surplus for the cost of the improvements made to the property by him/her prior to the resale? We need not answer the first question as we hold that there does not exist in Maryland a common-law rule entitling a d efaulting p urchaser a t a mortgag e foreclosu re sale to any of the excess f unds resu lting from a higher bid a t the resale cau sed by the def ault.

There w as no surp lus above the amou nt of the de ed of trust d ebt. Even af ter the resale there re maine d a def iciency. The "surplus pr oceeds" th at petitioner is ref erring to is in respect to the difference in the resale price above the original sale price

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Maryland Law