We recently assisted a client that could not get a refinance deed of trust recorded in Baltimore County. The tax office demanded over $5,000 it claimed was due on two prior deeds in the chain of title for transactions one year prior to the deed of trust! Even though the lien sheet for the client's refi was clear, the County claimed the entitlement to recalculate and recapture the tax, and further refused to record the client's deed of trust until the funds were paid. We communicated directly with the County Attorney's Office, explained the operation of the various tax and recording provisions, and arranged for the County's acceptance of the deed of trust for recording within one week's time.
At risk, of course, is that the County's refusal to accept the instrument could have pushed the recording outside the bankruptcy code's "safe harbor" period in the event the borrower files for bankruptcy sometime in the near future. There was also the risk of intervening liens, and a loss of lien priority.
If the County had not accepted our analysis, the client would have had to advance the funds, and then file a claim for reimbursement with the Comptroller's office. This would have cost additional legal fees. The poorest choice would have been for the client to withhold the instrument while chasing the borrower in court to compel payment of the $5,000.
The lesson: Get it recorded! We can help you sort through the recoupment issues, after the lender's lien is perfected.
