Full Opinion

William L. Hallam v. New Life Evangelical Baptist Church, Inc., et al., No. 15, September Term, 2025. Opinion by Biran, J. MARYLAND RULES 14-211 AND 14-305 – FORECLOSURE – POST-SALE EXCEPTIONS – The Supreme Court of Maryland held that a borrower who contends a lien is invalid or that a lienholder otherwise lacks the right to foreclose on property for any reason must raise such a defense under Maryland Rule 14-211 before the foreclosure sale occurs, provided the borrower knows or reasonably should know the pertinent facts giving rise to such a defense before the sale. 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. These parameters apply regardless of who purchases the property at the foreclosure sale. MARYLAND RULE 14-211 – BORROWER’S OPTIONS UPON FAILURE TO COMPLY WITH A CONDITION OF AN ORDER STAYING A FORECLOSURE SALE – The Supreme Court of Maryland held that, where a borrower fails to meet one or more conditions of an order staying a foreclosure sale, the borrower does not necessarily forgo the opportunity to obtain a ruling on the merits of their Rule 14-211 motion before the sale. A borrower in that situation has several options. First, the borrower may file a motion to extend the stay to allow the borrower more time to satisfy the condition in question. If the court enters an order denying the motion to extend the stay and/or enters an order revoking the stay, the borrower may note an interlocutory appeal under Md. Code Ann., Cts. & Jud. Proc. § 12-303(3)(i) (1973, 2020 Repl. Vol., 2025 Supp.). Second, if a borrower cures the non-compliance prior to a rescheduled foreclosure sale, the borrower may move for reinstatement of the stay and, if necessary, rescheduling of the merits hearing. Third, even if the borrower does not cure their non-compliance, the borrower may ask the court to go forward with a merits hearing prior to the rescheduled foreclosure sale. A circuit court is not required on its own initiative to reschedule a merits hearing for a date before the rescheduled sale. Circuit Court for Baltimore City Case No.: 24-O-22-001063 Argued: October 6, 2025 IN THE SUPREME COURT OF MARYLAND No. 15 September Term, 2025 WILLIAM L. HALLAM v. NEW LIFE EVANGELICAL BAPTIST CHURCH, INC., ET AL. Fader, C.J. Watts Booth Biran Gould Eaves Killough, JJ. Opinion by Biran, J. Watts, Eaves, and Killough, JJ., dissent. Filed: June 22, 2026 Pursuant to the Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. 2026.06.22 14:50:10 -04'00' Gregory Hilton, Clerk The Maryland Rules provide a framework for the conduct of foreclosure proceedings that is designed to provide fairness and predictability to borrowers, lienholders, and purchasers of distressed assets. Under this system, borrowers may file challenges at three points in time 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. Our prior cases have explained that the time to raise known and ripe defenses to the right to foreclose is pre-sale. In post-sale exceptions, borrowers ordinarily may only raise irregularities in the sale. However, we left open in two of our cases – Bates v. Cohn, 417 Md. 309 (2010), and Thomas v. Nadel, 427 Md. 441 (2012) – whether a borrower may assert a post-sale exception that the underlying debt was the product of fraud. We consider that question in this case. Petitioner William Hallam, as Substitute Trustee (the “Trustee”), filed a foreclosure action against Respondents New Life Evangelical Baptist Church, Inc. (“New Life”) and Turning Point, Inc. (“Turning Point”) concerning parcels of real property in Baltimore City (the “Property”). Prior to the scheduled sale date, Respondents raised several defenses to foreclosure. Their chief contention was that the lender, Kevin Pfeffer, long ago had forgiven the debt upon which the foreclosure action was based. According to Respondents, Mr. Pfeffer persuaded New Life’s senior pastor, Reverend Milton Williams, to maintain the satisfied mortgage in Baltimore City land records as a purported lien on the Property, supposedly to protect New Life from claims of potential creditors. The circuit court scheduled a hearing at which the parties would litigate the merits of Respondents’ defenses. The court stayed the foreclosure sale to allow the hearing to go forward. So far, so good. But then Respondents failed to satisfy a property insurance condition that the circuit court had imposed on its grant of the stay. The court denied Respondents’ motion to extend the time to obtain insurance, and the stay dissolved. The Trustee rescheduled the foreclosure sale for a new date. Respondents did not file an interlocutory appeal of the denial of their motion to extend the time to obtain insurance. Nor did they ask the circuit court to reschedule the merits hearing for a new date before the rescheduled sale date or to reinstate the stay after they allegedly obtained insurance. The sale occurred without the court having ruled on the merits of Respondents’ defenses. Mr. Pfeffer purchased the Property at the sale. In post-sale exceptions, Respondents again raised the alleged invalidity of Mr. Pfeffer’s lien. They also added a new allegation of fraud, based on the contention that Mr. Pfeffer had never made a loan to New Life. The circuit court determined that Respondents could not raise these claims as post-sale exceptions and ratified the sale. Respondents appealed. The Appellate Court of Maryland reversed and remanded for an evidentiary hearing at which Respondents would be permitted to prove post-sale that Mr. Pfeffer’s asserted right to foreclose was the product of fraud. The Appellate Court based its ruling on three circumstances: (1) Respondents raised and preserved a defense sounding in fraud pre-sale; (2) Mr. Pfeffer, as opposed to a third party, purchased the Property at the sale; and (3) the 2 alleged fraud goes to the heart of Mr. Pfeffer’s right to foreclose. We granted the Trustee’s petition for certiorari. We conclude that the circuit court correctly overruled Respondents’ post-sale exceptions regarding Mr. Pfeffer’s right to foreclose. 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 motion to stay the sale and dismiss the action. This includes a claim that the lien is invalid for any reason, including satisfaction of the debt, forgery, or other fraud. 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. This rule applies regardless of who purchases the property at the foreclosure sale. Here, Respondents raised defenses sounding in fraud pre-sale. The circuit court initially scheduled a merits hearing and stayed the sale. However, the stay dissolved after Respondents failed to obtain the required insurance coverage. Respondents took no further action to obtain a ruling on the merits of their defenses before the sale, and the sale went forward. After the sale, Respondents could not raise their pre-sale defenses again as exceptions. Nor were Respondents permitted to raise their new fraud claim as a post-sale exception. Respondents knew or should have known the facts underlying that claim for more than 20 years. They had to raise that defense pre-sale as well. Because Respondents are not entitled to any further hearing in the circuit court concerning Mr. Pfeffer’s right to foreclose, we reverse the judgment of the Appellate Court. 3 I Background A. Maryland’s Rules Regarding Challenges to Foreclosure 1. Pre-Sale After a lienholder brings a foreclosure action under Maryland law, the borrower, record owner, or certain other interested parties “may file in the action a motion to stay the sale of the property and dismiss the foreclosure action.”1 Md. Rule 14-211(a)(1).2 In an action not involving residential property, a borrower must file a motion under Rule 14-211 no later than 15 days after first becoming aware of the action. See Md. Rule 14- 211(a)(2)(B); Md. Rule 14-209(a). The motion to stay and dismiss must be under oath or supported by affidavit and must state with particularity the factual and legal basis of each defense that the borrower has to “the validity of the lien or the lien instrument or to the right of the plaintiff to foreclose in the pending action.” Md. Rule 14-211(a)(3). The circuit court must deny the motion to stay and dismiss if the motion: (1) was untimely filed without good cause; (2) is not substantially in compliance with Rule 14-211’s requirements; or (3) fails on its face to state a prima facie defense. Md. Rule 14-211(b)(1). Conversely, if the motion passes muster on these three points, “the court shall set the matter for a hearing 1 For ease of reference, we will refer at times to any person who is entitled to challenge a foreclosure pre-sale or post-sale as a “borrower.” 2 This Court adopted Maryland Rule 14-211 in 2009. Before then, a borrower who sought to challenge a foreclosure pre-sale was required to file a motion for injunctive relief under former Maryland Rule 14-209. 4 on the merits of the alleged defense.” Md. Rule 14-211(b)(2). “The hearing shall be scheduled for a time prior to the date of sale, if practicable, otherwise within 60 days after the originally scheduled date of sale.” Md. Rule 14-211(b)(2)(C). “If the hearing on the merits cannot be held prior to the date of sale, the court shall enter an order that temporarily stays the sale on terms and conditions that the court finds reasonable and necessary to protect the property and the interest of the plaintiff.” Md. Rule 14-211(c)(1). These conditions “may include assurance that … the property will remain covered by adequate insurance”; in addition, the court may require the borrower to “provide reasonable security for compliance with the conditions it sets and may revoke the stay upon a finding of non-compliance.” Md. Rule 14-211(c)(1). After a hearing on the merits, if the 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 shall grant the motion and, unless it finds good cause to the contrary, dismiss the foreclosure action.” Md. Rule 14-211(e). “If the court finds otherwise, it shall deny the motion.” Md. Rule 14-211(e). 2. Post-Sale As soon as practicable, but no later than 30 days after a foreclosure sale, “the person authorized to make the sale shall file with the court a complete report of the sale and an affidavit of the fairness of the sale and the truth of the report.” Md. Rule 14-305(a). Both the purchaser and the auctioneer are required to file affidavits averring to certain matters relating to the sale. Md. Rule 14-305(b), (c). After the report of sale is filed, “the clerk shall issue a notice containing a brief description sufficient to identify the property and stating 5 that the sale will be ratified 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 exceptions to the sale. Md. Rule 14-305(e)(1). Exceptions must be in writing, “shall set forth the alleged irregularity with particularity, and shall be filed within 30 days after the date of a notice issued pursuant to section (d) of this Rule or the filing of the report of sale if no notice is issued.” Md. Rule 14-305(e)(1). “Any matter not specifically set forth in the exceptions is waived unless the court finds that justice requires otherwise.” Md. Rule 14-305(e)(1). After a borrower files exceptions to a foreclosure sale, the court “shall determine whether to hold a hearing on the exceptions but it may not set aside a sale without a hearing.” Md. Rule 14-305(e)(2). The court must hold a hearing “if a hearing is requested and the exceptions or any response clearly show a need to take evidence.” Md. Rule 14- 305(e)(2). The court shall ratify the sale if: (1) the time for filing exceptions has expired and exceptions either were not filed or were filed but overruled; and (2) “the court is satisfied that the sale was fairly and properly made.” Md. Rule 14-305(f). If the court is not satisfied that the sale was fairly and properly made, “it may enter any order that it deems appropriate.” Md. Rule 14-305(f). 3. Post-Ratification Upon ratification of a sale, the court may refer the matter to an auditor to state an account. Md. Rule 14-305(g). Exceptions to an auditor’s report may be filed under Maryland Rule 2-543(g). A hearing may be held on such exceptions under Maryland Rule 2-543(h). 6 B. This Case Rev. Williams and Mr. Pfeffer have known each other since at least 2000. Although the two are at odds now, the record reflects that for many years they had a close working relationship. New Life has been located at the Property3 since at least the 1980s. Eventually, Turning Point – a substance abuse treatment center – also began operating at the Property. 1. The Disputed Mortgage Debt On several occasions between 1987 and 1990, New Life borrowed funds from the Church Buildings Committee of Baptist Mission of North America, Inc. (the “Baptist Mission”). New Life executed notes made payable to the Baptist Mission evidencing these loans (the “Original Notes”). The Original Notes were secured by deeds of trust on the Property. At some point prior to August 24, 2000, Mr. Pfeffer purchased the Original Notes from the Baptist Mission.4 The Baptist Mission assigned the deeds of trust securing the Original Notes to Mr. Pfeffer. Thus, Mr. Pfeffer became the holder of the liens on the Property. 3 There are discrepancies in the briefs and the record about which parcels of land comprise the Property. The report of sale filed under Maryland Rule 14-305(a) states that three parcels were sold at foreclosure: 2401 East North Avenue, 2413-15 East North Avenue, and 2417 East North Avenue. 4 The record does not contain documentary evidence of the amount Mr. Pfeffer paid to purchase the Original Notes. Mr. Pfeffer testified in a 2023 deposition that, to his recollection, he purchased the Original Notes for $30,000. Rev. Williams’s recollection in 2023 was that Mr. Pfeffer paid “around $30,000” for the Original Notes. 7 On August 24, 2000, Rev. Williams, on behalf of New Life as the borrower, and Mr. Pfeffer as the lender, executed a new note (the “2000 Note”) that was, in essence, a refinancing of New Life’s debts now owed to Mr. Pfeffer. The 2000 Note stated that New Life and Mr. Pfeffer had agreed to consolidate the Original Notes into a single note, to include the principal balance of, and unpaid interest on, the Original Notes, which was said to total $500,000. Under the terms of the 2000 Note, New Life agreed to pay Mr. Pfeffer the principal sum of $500,000 at an annual interest rate of nine percent over a period of 30 years beginning September 1, 2000. New Life’s monthly payment of principal and interest was to be $4,023.11. The 2000 Note was secured by a deed of trust dated August 24, 2000 (the “2000 Deed of Trust”), which encumbered the Property (with the 2000 Note, the “Mortgage Debt”). The 2000 Deed of Trust required that insurance against fire and other property damage be maintained on the Property. On December 31, 2000, Mr. Pfeffer sent a letter to Rev. Williams informing him that New Life had “been delinquent” in making payments on the Mortgage Debt. Mr. Pfeffer stated that “the principal balance secured by the mortgage of $500,000 is hereby accelerated and declared immediately due and payable.” Mr. Pfeffer continued: That’s the bad news. The good news is that, due to significant investment gains I have experienced over the past couple years, I have decided to donate to the church all of the principal and interest owed to me under the [Mortgage Debt], which totals $516,092.44. Congratulations, the church is now debt free. (Paragraph break omitted). Mr. Pfeffer claims that his December 31, 2000 letter to Rev. Williams was merely an “offer” to forgive the Mortgage Debt. According to Mr. Pfeffer, after he sent the letter 8 to Rev. Williams, he and Rev. Williams agreed that the Mortgage Debt in fact would not be forgiven, but rather would remain in force. Mr. Pfeffer claims that he and Rev. Williams agreed that it would be in New Life’s interest to have the Mortgage Debt remain outstanding for purposes of financing New Life was seeking at the time. Rev. Williams agrees that he and Mr. Pfeffer decided the Mortgage Debt would remain visible to third parties, despite Mr. Pfeffer’s December 31, 2000 letter. However, according to Rev. Williams, he and Mr. Pfeffer understood and agreed that Mr. Pfeffer, in fact, had forgiven the Mortgage Debt and therefore would not seek to collect on it. Rev. Williams says that Mr. Pfeffer led him to believe that this arrangement would provide New Life with a “blanket of protection” against potential creditors. Rev. Williams further claims that he was not “supposed to talk about” the fact that Mr. Pfeffer had forgiven the Mortgage Debt; rather, “[t]hat was supposed to be [their] secret.” On June 26, 2015, New Life sold its interest in the Property to Turning Point. The Purchase and Sale Agreement recited that Turning Point agreed to purchase the Property “subject to all existing mortgages.” On the same day, Rev. Williams, on behalf of both New Life and Turning Point, and Mr. Pfeffer entered into a Subordination Agreement. The Subordination Agreement stated that Mr. Pfeffer agreed to subordinate his lien on the Property arising from the Mortgage Debt in favor of a deed of trust being granted by Turning Point to secure a $1.5 million loan it was obtaining from M&T Bank (“M&T”).5 5 Turning Point subsequently paid off the M&T loan. M&T released its deed of trust on the Property in 2020. 9 On December 31, 2018, New Life, Turning Point, Mr. Pfeffer, and a corporation controlled by Mr. Pfeffer called Clinic Management and Development Services, Inc. (“CMDS”) executed what they referred to as the “Four Party Agreement.”6 As part of the Four Party Agreement, Mr. Pfeffer agreed to sell the Mortgage Debt to Turning Point upon completion of Turning Point’s payment of the “Purchase Price.” The Purchase Price included monthly payments to Mr. Pfeffer of $25,000 beginning on January 1, 2019, and ending on January 1, 2050. The Four Party Agreement provided that, as long as Turning Point made the required monthly Purchase Price payment of $25,000, Mr. Pfeffer would not demand any monthly payments on the Mortgage Debt that had become due in the past or would become due in the future. Prior to the execution of the Four Party Agreement, New Life never made a payment to Mr. Pfeffer on the Mortgage Debt. From January 2019 through June 2022, Turning Point made monthly $25,000 payments to Mr. Pfeffer under the terms of the Four Party Agreement. Turning Point classified the $25,000 payments to Mr. Pfeffer in its Form 990 tax return for 2020 as expenses for “Mortgage Purchase.” In June 2022, Turning Point apparently was in the midst of financial problems. On June 20, 2022, Gerald Walsh, counsel for Turning Point, emailed Paul Kim, counsel for Mr. Pfeffer, about an “expense issue, the 25K monthly payment for the Mortgage purchase recorded on [Turning Point’s] financial statements.” Mr. Walsh asserted that the Mortgage 6 On the next day, January 1, 2019, CMDS and Turning Point entered into a Management Services Agreement under which CMDS agreed to “operate and manage the day-to-day administrative aspects” of Turning Point’s substance abuse treatment clinic. 10 Debt was satisfied, as evidenced by Mr. Pfeffer’s December 31, 2000 letter. Thus, according to Mr. Walsh, “[t]here is no mortgage to purchase” and Turning Point “can no longer pay [Mr. Pfeffer] 25K each month to purchase the Mortgage.” Mr. Kim replied: “[W]ith all due respect, I don’t know why you keep raising this mortgage issue. We’ve discussed it, [Mr. Pfeffer] does not care about it, and it is not the reason why [Turning Point] is facing fiscal fatality. Please focus on the checks that are due today, and not this.” Turning Point subsequently ceased making monthly $25,000 payments to Mr. Pfeffer. Mr. Pfeffer deemed Turning Point in default under the Four Party Agreement, and directed the Trustee to seek foreclosure of the Property. 2. Foreclosure Proceedings in the Circuit Court In November 2022, the Trustee filed an Order to Docket a foreclosure action in the Circuit Court for Baltimore City relating to the Property. He listed New Life and Turning Point as the defendants. The Trustee scheduled a foreclosure sale for January 11, 2023. On January 6, 2023, Respondents filed a Petition for Temporary Restraining Order and Request for Hearing, which the circuit court construed as a motion to stay and dismiss the foreclosure action under Maryland Rule 14-211(a). In their motion, Respondents alleged, among other things, that the Trustee had no authority to foreclose because Mr. Pfeffer had forgiven the Mortgage Debt prior to the parties signing the Four Party Agreement. Respondents also asserted that a delay of the sale would not harm Mr. Pfeffer’s interests. The Trustee filed an opposition to Respondents’ motion in which he disputed Respondents’ contention that Mr. Pfeffer had forgiven the Mortgage Debt. He pointed to 11 several post-2000 documents in which the parties referred to the Mortgage Debt as encumbering the Property, including the Subordination Agreement in 2015 and the Four Party Agreement in 2018. Responding to the contention that a stay would not harm Mr. Pfeffer, the Trustee reported Mr. Pfeffer’s understanding – as set forth in an attached affidavit – that the Property was not covered by fire or other property insurance, contrary to the terms of the 2000 Deed of Trust. The circuit court held an initial hearing on January 10, 2023. Counsel for Respondents told the court that Respondents were not alleging that Mr. Pfeffer committed fraud in obtaining Rev. Williams’s agreement to keep the Mortgage Debt on record. Regardless, the circuit court determined that Respondents had sufficiently alleged prima facie defenses to warrant a hearing on the merits. Because it was not possible to hold that hearing prior to the foreclosure sale (which was scheduled for the next day), the court decided to stay the sale. The court then brought up the subject of conditions it should impose to protect Mr. Pfeffer’s interests pending the merits hearing, focusing on the alleged lack of property insurance: “This insurance issue I saw, the insurance money not being paid, is very, very serious…. [I]t needs to be insured.” The Trustee agreed that “first and foremost” among any conditions “ought to be proof that this property is insured.” The Trustee also requested that the court require Respondents to post a bond to ensure reimbursement of Mr. Pfeffer’s expenses in the event the foreclosure sale were to go forward. When asked by the court whether there was insurance on the Property, Rev. Williams replied that “[t]he property insurance is in force.” In response to the court’s 12 question about the amount of property insurance coverage, Rev. Williams said “I think it’s in excess of $1 million,” but he explained that he was waiting to receive verification of the amount from a member of his staff. Rev. Williams was unable to provide further information about property insurance coverage during the hearing. On January 13, 2023, the circuit court issued a Temporary Stay Order. The order recited that the foreclosure sale “is stayed pending further Order of the Court or failure of the Borrower or the Property Owner to satisfy the ‘Conditions,’ as defined below[.]” The “Conditions” were that, on or before January 24, 2023, Respondents file with the court: (1) proof that the Property is insured against fire, property damage, and general hazards by an insurance policy or policies providing not less than $1.25 million of coverage; and (2) a bond in the amount of $15,000. The stay order further provided: If [Respondents] fail to satisfy the Conditions on or before January 24, 2023, upon the filing by the Trustee with the Court of a notice that the Conditions have not been satisfied the stay of the sale of the Property shall dissolve without further Order of the Court. The right of [Respondents] to seek to reinstate the stay upon a showing that the Conditions were satisfied is reserved[.] The court set the merits hearing for April 17 and 18, 2023.7 7 As noted above, Maryland Rule 14-211(b)(2)(C) provides that a hearing on the merits of a pre-sale challenge “shall be scheduled for a time prior to the date of sale, if practicable, otherwise within 60 days after the originally scheduled date of sale.” Under this provision, the merits hearing on Respondents’ motion should have been scheduled for no later than 60 days after January 11, 2023, the originally scheduled date of the foreclosure sale. At the January 10 hearing, the court indicated that the merits hearing would be held beginning on March 3. The record does not reflect why the court ultimately set the merits hearing beyond the 60-day deadline. 13 On January 24, 2023, Respondents filed a Motion to Extend Time to Comply with Conditions, requesting seven additional days to provide proof of property insurance.8 Respondents represented that Rev. Williams had incorrectly stated at the January 10 hearing that the Property presently carried property insurance. Respondents advised that they were in the process of obtaining the required coverage, and that they expected to be able to provide proof of such insurance within seven days. They also stated that “[i]f this motion is denied, foreclosure proceeding [sic] would begin anew and an actual foreclosure would not occur for at least 30 days. The properties will be insured well before then.” The Trustee opposed Respondents’ motion to extend the time to comply with the insurance condition. Among other grounds for denial, the Trustee argued: Had the sale of the … property occurred as scheduled on January 11, 2023, the risk of loss to the property would have been assumed by the successful bidder on that date. Had something happened to the property after the date of sale, the successful bidder would still have been required to pay its full bid price. [Mr. Pfeffer] and [Turning Point] would have received what the bidding process established that the property was worth, whether or not there was insurance. Now, two weeks have passed in which neither [Turning Point] nor [Mr. Pfeffer] would realize the value of the property if some casualty had occurred and [Respondents] are asking the Court for permission to leave the property unprotected for yet another week, based on an “expectation” of someone who already told the Court falsely that there was insurance that insurance will be obtained during that additional week. On January 25, 2023, the circuit court denied Respondents’ motion to extend the time to comply with the insurance condition. On January 26, 2023, the Trustee filed a Notice of Failure to Satisfy Conditions to Stay of Sale and Dissolution of Stay. The Trustee’s notice recited that, as a result of Respondents’ failure to comply with the 8 Respondents timely complied with the condition to file a $15,000 bond. 14 insurance condition, the stay of the foreclosure sale “is dissolved.” The Trustee subsequently rescheduled the foreclosure sale for March 1, 2023, and provided Respondents and their counsel with notice of the new sale date on February 9 and 10, 2023, respectively. Respondents did not appeal the denial of their motion for extension of time or the dissolution of the stay. They also did not ask the circuit court to reschedule the merits hearing for a date prior to the new sale date of March 1. Nor did they move to reinstate the stay after they allegedly obtained the required insurance.9 The sale went forward as scheduled on March 1, 2023. Mr. Pfeffer was the only bidder; he purchased the Property for $435,000. On March 3, 2023, the Trustee filed the report of sale. Respondents filed timely exceptions to the foreclosure sale. In their exceptions, Respondents repeated the claims they had made pre-sale relating to the alleged invalidity of Mr. Pfeffer’s lien. Following a hearing, the court issued an order on May 10, 2023, overruling these exceptions on the ground that Respondents could not raise these claims post-sale. However, the circuit court scheduled a hearing for June 1, 2023, at which Respondents would be permitted to challenge the sufficiency of the sale price and any other alleged irregularities with respect to the sale. On May 19, 2023, Respondents filed a motion for reconsideration of the circuit court’s May 10 order. Respondents asserted that they had recently learned through taking 9 In their brief, Respondents assert that they “obtained the required property insurance about two weeks after the Court’s initial deadline.” Two weeks after the court’s initial deadline of January 24 was more than two weeks before the rescheduled foreclosure sale date of March 1. 15 Mr. Pfeffer’s deposition that the 2000 Note involved no loan from Mr. Pfeffer to New Life. In addition, for the first time, Respondents characterized Mr. Pfeffer’s alleged conduct as fraudulent. On June 1, 2023, the circuit court held a hearing on Respondents’ motion for reconsideration and their remaining exceptions to the sale. The court found that it was irrelevant that Mr. Pfeffer did not lend any additional funds to New Life in connection with the consolidation and restatement of the Original Notes in the 2000 Note. The court determined that Respondents’ claims regarding the invalidity of the lien, even if characterized as involving fraud by Mr. Pfeffer, were not properly raised as post-sale exceptions. Thus, the court denied the motion for reconsideration of its May 10 order. In addition, after an evidentiary hearing, the circuit court overruled Respondents’ exception to the sale based on the alleged insufficiency of the foreclosure sale price. The court found that the sale price of $435,000, which was greater than 50 percent of the assessed value of the Property, did not shock the conscience. The circuit court issued a Final Order of Ratification of Sale on June 1, 2023. The court stayed the ratification order pending appeal. 3. Appeal Respondents appealed. They argued that the circuit court erred in overruling their post-sale exceptions concerning the validity of Mr. Pfeffer’s lien and his alleged fraudulent acts. Respondents also contended that the circuit court incorrectly overruled their exception concerning the sale price. 16 In an unreported opinion, a divided panel of the Appellate Court of Maryland reversed the circuit court’s ratification order and remanded the case to the circuit court for an evidentiary hearing at which Respondents would attempt to prove their fraud allegations. New Life Evangelical Baptist Church, Inc. v. Hallam, No. 860, Sept. Term, 2023, 2025 WL 79643, at *4 (Md. App. Ct. Jan. 13, 2025).10 The Appellate Court recognized that this Court previously had held that borrowers challenging foreclosure generally must assert all known and ripe defenses to foreclosure before the sale. See id. at *4. However, as the Appellate Court explained, Bates v. Cohn and Thomas v. Nadel left open the possibility that a borrower may assert a post-sale exception that the deed of trust was itself the product of fraud. Id. The Appellate Court opined that three factors warranted the conclusion that Respondents’ “defense of fraud remains viable post-sale.” Id. at *5. First, Respondents raised and preserved a defense sounding in fraud pre-sale. See id. at *3 n.7, *5.11 The Appellate Court emphasized that the circuit court had found at the initial hearing that Respondents were entitled to a hearing on the merits of their defenses. Id. at *5. The 10 The Appellate Court did not reach the question concerning the adequacy of the sale price. See id. at *4 n.10. 11 In this regard, the Appellate Court reasoned that the label Respondents attached to their defense pre-sale was not dispositive. The court observed that, starting with their first pleading in the circuit court, Respondents consistently sought to defend against the foreclosure action with their theory that Mr. Pfeffer had “used his position as New Life’s financial advisor to dupe New Life into accepting a $500,000 mortgage for very little or (as it appears) no value.” Id. at *3 n.7. The Appellate Court added: “Frankly, we aren’t sure why [Respondents at the initial hearing] disclaimed that [they were] alleging fraud. Maybe [counsel] was just being reflexively polite or nonconfrontational.” Id. 17 Appellate Court took no issue with the dissolution of the stay after Respondents failed to comply with the insurance condition. See id. However, the Appellate Court reasoned, “[t]he penalty for failing to satisfy the circuit court’s conditions is revocation of the stay…. It does not … also result in a waiver of the borrower’s defenses.” Id. Second, the fact that the purchaser at foreclosure was the lender and the person who allegedly defrauded Respondents, as opposed to a third party, favored a remand for a merits hearing. Id. at *6. The court observed that, as a policy matter, “courts are hesitant to allow post-sale claims so as not to have a chilling effect on willing third-party buyers.” Id. That concern was not present in this case, according to the Appellate Court, because Mr. Pfeffer was the purchaser. Id. Third, the Appellate Court pointed to the “scope of the fraud” Respondents had alleged. Id. The court contrasted this case with others where “desperate property owners … raise allegations of fraud with the hope that if they can just find a clerical error in the mortgage documents, they will be allowed to stay on their properties and the mortgage lender will be unable to recover the money it lent them.” Id. at *6 n.16. In this case, “if proven, the fraud alleged would invalidate the underlying mortgage, and eliminate Pfeffer’s right to foreclose.” Id. The Appellate Court was of the view that “the best way to analyze this case is as a post-sale challenge in which we find, as described above, three reasons that this case can fit within the tight confines permitted for post-sale challenges.” Id. at *5 n.12. However, the Appellate Court provided an alternative theory that construed Respondents’ post-sale exceptions as a continuation of their pre-sale motion to dismiss: 18 Should a reviewing court find that the law is even more restrictive of post- sale challenges than previously expressed, such that not even these reasons are sufficient, we would hold that [Respondents’] was a pre-sale challenge. We would hold that while the circuit court did not err by revoking the stay when [Respondents] failed to obtain insurance, nothing about that action was intended to or in fact did waive [Respondents’] pre-sale challenges. As such, under this alternative method of analyzing this case, we would hold that Respondents’ pre-sale challenges remain open and we would remand to permit the circuit court to hold a hearing on it, even now. Id. Indeed, the Appellate Court continued, “it might be proper to characterize this as a pre-sale challenge whose resolution was simply delayed until after the sale.” Id. at *6 n.14. The dissenting member of the panel, the Honorable Glenn T. Harrell, Jr., would have affirmed the circuit court’s overruling of Respondents’ fraud-related exceptions. Judge Harrell observed that the consequence of Respondents’ failure to secure insurance was that the stay was lifted, allowing the foreclosure sale to proceed. Id. at *7 (Harrell, J., dissenting). In Judge Harrell’s view, this “failure to perfect [Respondents’] pre-sale opportunity to litigate [their fraud] claim (whether through negligence or otherwise) should be deemed a waiver of an assumed right to assert a virtually identical fraud claim as a post- sale challenge.” Id. Judge Harrell further explained that “no modern reported Maryland case involved a litigant who, knowing pre-sale sufficient bases for a fraud claim, fails to pursue that claim pre-sale. The present case is a classic waiver/non-preservation situation. [Respondents are] not entitled to essentially a do-over opportunity post-s