When Foreclosure Proceedings Can be Stopped in Maryland Due to Fraud

On June 22, 2026, the Supreme Court of Maryland handed down a decision in the case of Hallam v. New Life Evangelical Baptist Church, Inc., which clarifies the process for challenging a foreclosure sale when there is an allegation of fraud.

The Maryland Rules of Civil Procedure provide a legal framework for foreclosing on loans secured by real property. Under these rules, a borrower may challenge a Maryland foreclosure proceeding at three points after a lienholder dockets a foreclosure action: (1) before a foreclosure sale, by filing a motion to stay the sale and dismiss the action; (2) after a sale, by filing exceptions to ratification of the sale; and (3) after ratification of the sale, by filing exceptions to the auditor’s statement of account.[1] Prior to a foreclosure sale, the borrower, a record owner, or certain other interested parties may file a motion to stay the sale of the property and dismiss the foreclosure action pursuant to Md. Rule 14-211(a)(1).[2] In an action not involving residential property, a borrower must file this motion no later than 15 days after first becoming aware of the action. Md. Rule 14-211(a)(2)(B); Md. Rule 14-209(a).[3] After a hearing on the merits, if the trial court finds that the borrower has established that the lien or the lien instrument is invalid, or that the plaintiff has no right to foreclose in the pending action, it is required to grant the motion and, unless it finds good cause to the contrary, dismiss the foreclosure action.” Md. Rule 14-211(e).

After a foreclosure sale, the person authorized to make the sale is required to file a report of the sale with the court. Md. Rule 14-305(a). The clerk then issues a notice stating that the sale will be ratified by the court unless cause to the contrary is shown within 30 days after the date of the notice. Md. Rule 14-305(d).To show “cause to the contrary,” a borrower may file written exceptions to the sale. Md. Rule 14-305(e)(1).

In earlier cases, the Supreme Court of Maryland directed that the time to raise known and ripe defenses to the right to foreclose on property is pre-sale (under Rule 14-211) – with the post-sale exceptions process under Rule 14-305 ordinarily limited to rising irregularities in the sale itself.[4] In the court’s new Hallam opinion, it addresses whether a borrower may assert a post-sale exception that the underlying debt was the product of fraud.

The court in Hallam held that, if a borrower knows or reasonably should know of a defense to the right to foreclose in advance of the sale, the borrower must raise that defense in a pre-sale motion to stay the sale and dismiss the action.[5] This includes a claim that the lien is invalid for any reason, including satisfaction of the debt, forgery, or other fraud.[6] A borrower may not raise as a post-sale exception a defense to foreclosure that it included or should have included in a pre-sale motion.[7] This rule applies regardless of who purchases the property at the foreclosure sale.[8]

Lewicky, O’Connor, Hunt & Meiser has experience litigating claims that a foreclosure proceeding should be dismissed on account of fraud. The new Hallam case makes clear that a person wishing to stop a foreclosure proceeding because of a claim of fraud must take action quickly, within a limited period of time after learning of or suspecting fraud.

[1] Hallam v. New Life Evangelical Baptist Church, Inc., 2026 Md. LEXIS 283, Slip Op. pp. 3-4.

[2] Id., Slip Op. p. 7.

[3] Id.

[4] Id., Slip Op. p. 4.

[5] Id., Slip Op. pp. 6, 37, 42-45.

[6] Id., Slip Op. pp. 6.

[7] Id.

[8] Id.