A Court's Equitable Powers May Make One Party Pay All the Trustee's Fees in a Court-Appointed Sale of Real Property
December 21, 2023
By: Veronica J. Mina
In Nolan v. Nolan, No. 0695, 2023 Md. App. LEXIS 806 (Md. App. Nov. 29, 2023), the Appellate Court of Maryland held that the trial court committed no error by finding equity required one party to pay the entirety of the trustee’s fees incurred after ordering the sale of the marital home and dividing the net proceeds equally pursuant to Section 14-107 of the Real Property Article of the Maryland Code.
In July 2013, Michael W. Nolan, Jr. (“Mr. Nolan”) filed for divorce against Christine Marie Nolan (“Ms. Nolan”). The parties entered into a Marital Settlement Agreement (“Agreement”) on January 21, 2015. The Agreement in relevant part granted Ms. Nolan exclusive use and possession of the marital home for a period of three years following formation of the Agreement and required her to pay all mortgage and payment expenses for the property during that time. After either the expiration of the exclusive use and possession period or Ms. Nolan’s remarriage, the marital home was to be listed for sale. Any proceeds or deficiencies of the sale of the home were to be shared equally between the parties.
More than three years later, Ms. Nolan remained in the property and refused to sell it following the expiration of the three-year period because she believed there was “not enough money to sell the property because of the liens.” At that point, beginning in July 2019, Ms. Nolan began paying only half of the martial home’s mortgage instead of continuing to pay the full mortgage as she had during the three-year period and as agreed by the parties. On March 13, 2020, in response to Ms. Nolan’s refusal to uphold her end of the Agreement, Mr. Nolan filed a Motion for Sale of Former Marital Home, which Ms. Nolan opposed. Recognizing that the circuit court “is a court of equity” and finding that it would be inequitable for Ms. Nolan to remain in the home any longer, the circuit court granted the Motion for Sale and appointed a trustee to oversee the sale of the property while also ordering Ms. Nolan to help the trustee facilitate the sale as necessary. The court also ordered Ms. Nolan to pay the trustee’s costs “unless [the court determined] at a later hearing that those costs should be allocated in a different manner.” The court’s order regarding payment of the trustee’s fees was premised on its finding that Ms. Nolan’s continued residence after the three-year period and her continued refusal to list the property for sale was not what the parties agreed to in 2015. Ultimately, Ms. Nolan benefited by remaining in the marital home for an additional three years, with Mr. Nolan paying one-half of the mortgage for over a year. Thus, it was only equitable for Ms. Nolan to pay for the trustee according to the court.
The home was sold for $550,000 and generated net proceeds in the total amount of $36,062.84 after settlement. The trustee then requested payment of his/her fees in the amount of $22,875. The circuit court found that Mr. and Ms. Nolan were each entitled to one half of the net proceeds of the sale, i.e., $18,031.42. After deducting Ms. Nolan’s share from the trustee’s fees, the court found that Ms. Nolan was required to pay the deficit of $4,843.58 to the trustee, which she appealed.
On appeal, the Appellate Court agreed that the circuit court possessed the authority to order Ms. Nolan to pay the entirety of the trustee’s costs pursuant to Section 14-107(a) of the Real Property Article of the Maryland Code. The Appellate Court’s decision affirmed the well-recognized principle that “a court sitting in equity has broad discretionary authority.” Finding that an action under Section 14-107 of the Real Property Article is equitable in nature and, further, that any circuit court adjudicating issues relating to divorce sits in equity, the court held that the circuit court was accorded broad discretionary authority in fashioning the distribution of the trustee’s fees between the parties.
Ultimately, the circuit court’s order to execute a judicial sale merely carried out what the parties had agreed to five years earlier. Despite that agreement, Ms. Nolan remained in the home long after the three-year period concluded, with Mr. Nolan paying half of the mortgage payments beginning in July 2019, and she consistently refused to sell the home and frustrated efforts to sell the home even after a trustee was appointed. Thus, the Appellate Court had no issue finding it appropriate to hold Ms. Nolan solely responsible for the costs of the trustee after considering her actions prior to and during the sale.
The court’s decision in Nolan is significant in that it re-affirms a circuit court’s broad discretionary power as a court sitting in equity and the ramifications for parties who refuse either to adhere to agreements they previously entered into or who frustrate efforts of a court-appointed trustee to sell a piece of property. Parties dealing with a court-appointed trustee should be aware that an equitable decision does not mean the outcome will be the same for both parties, especially when one party creates the need for a court-appointed trustee and subsequently causes the trustee to unnecessarily incur extraordinary fees. When a trustee is appointed, parties are encouraged to comply as much as possible to effectuate a seamless and cost-efficient sale.