WOODWARD, J.
This appeal arises from the decision of the Circuit Court for Montgomery County to deny the motion filed by appellant, Kareem Grant, to release the judgment levy on his residential property located at 11355 King George Drive, Unit 11, Wheaton, Maryland ("the property"). Grant acquired the property from Jeffrey Ganz by means of a residential sales contract ("the contract"), which included, inter alia, a financing contingency provision. While the contract was pending, but before settlement occurred, appellees, Stacy G. Kahn and Steven Kahn ("the Kahns"), filed a Complaint for Confessed Judgment against Ganz, and the circuit court entered a Judgment by Confession against Ganz.
Grant presents one question for our review, which we have slightly rephrased:
Finding error, we shall reverse the judgment of the circuit court.
On May 29, 2007, Grant and Ganz entered into the contract whereby Grant agreed to purchase, and Ganz agreed to sell, the property for the sum of $320,000. A Montgomery County Jurisdictional Addendum to the contract contained, inter alia, the following provisions:
Grant never provided Ganz with Regional Form # 100. Nevertheless, on July 31, 2007, Grant and Ganz closed on the sale of the property. Grant delivered the purchase money of $320,000, which came from a loan for the same amount that was approved on the day of closing. In exchange, Ganz delivered to Grant a deed to the property, which was subsequently duly recorded.
On July 20, 2007, less than two months after Grant and Ganz entered into the contract, and while the contract remained executory, the Kahns filed a Complaint for Confession of Judgment, which resulted in the circuit court entering a Judgment by Confession against Ganz on July 24, 2007, in the amount of $148,929.52, plus interest of $1,094.10 and attorney's fees of $22,339.43. On March 27, 2008, the Kahns filed a request for Writ of Execution by Levy pursuant to Maryland Rule 2-641, in which the Kahns requested that the circuit court issue a Writ of Execution directing the sheriff to levy upon the property.
On April 4, 2008, Grant filed a Motion to Release Property from Judgment Levy. The circuit court held a hearing on the motion on May 28, 2008, at the conclusion of which the court denied Grant's motion. This timely appeal followed.
Grant argues that the doctrine of equitable conversion prevented the judgment against Ganz from attaching to the property. Specifically, Grant contends that, under the doctrine of equitable conversion, on May 29, 2007, when Grant and Ganz entered into the contract of sale, Grant became the equitable owner of the property and Ganz held only bare legal title. According to Grant, because a judgment creditor's lien cannot attach to bare legal
The Kahns counter that the circuit court was correct in its determination that the doctrine of equitable conversion was not applicable under the circumstances of the instant case. According to the Kahns, "[t]he ability of a buyer to specifically enforce a contract for realty is the lynchpin upon which rests the determination of whether equitable conversion has occurred." The Kahns contend that Grant could not have obtained specific performance of the contract of sale, because "specific performance requires that all contingencies and conditions precedent be satisfied by the party demanding the same." Here, according to the Kahns, the financing contingency remained unsatisfied and unremoved at the time that the confessed judgment was entered against Ganz, and thus equitable conversion had not occurred to prevent the judgment from attaching to the property. The Kahns also assert that Grant could not waive the financing contingency, because such contingency benefitted both Ganz, as seller, and Grant, as buyer. Finally, the Kahns contend that sound public policy supports affirming the circuit court, because fault lies with the title company that failed to bring the title examination up-to-date prior to closing. The Kahns conclude that a contrary holding would allow judgment debtors to shelter property from liens by entering into nonbinding contracts of sale.
Where "[t]he material first-level facts are not in dispute" and "[t]he issue decided by the circuit court, and pursued ... on appeal, is purely legal," we decide it de novo. Howard Cnty. v. Heartwood 88, LLC, 178 Md.App. 491, 496, 943 A.2d 22 (2008). In the instant appeal, the facts are not in dispute, and the issue on appeal is purely legal. We therefore decide the issue de novo.
We also note that "[t]he interpretation of a contract ... is a question of law, subject to de novo review." Clancy v. King, 405 Md. 541, 556-57, 954 A.2d 1092 (2008) (quotations omitted).
Anderson Adventures, LLC v. Sam & Murphy, Inc., 176 Md.App. 164, 178, 932 A.2d 1186 (2007) (citations, quotations, and alterations omitted).
"Equitable conversion ... is a theoretical change of property from realty to personalty, or vice versa, in order that the intention of the parties, in the case of a contract of sale, or the directions of the testator, in the case of directions in a will, may be given effect." Coe v. Hays, 328 Md. 350, 358, 614 A.2d 576 (1992). "The doctrine of equitable conversion and, more particularly, by contract, is [] well-established in Maryland." DeShields v. Broadwater, 338 Md. 422, 437, 659 A.2d 300 (1995). Our courts have routinely cited Thompson on Real Property's treatment of the topic:
11 Thompson on Real Property § 96.06(a) (David A. Thomas ed., 2002 & Supp.2008) (footnote omitted). See DeShields, 338 Md. at 437; Coe, 328 Md. at 358, 614 A.2d 576; Himmighoefer v. Medallion Industr., Inc., 302 Md. 270, 278, 487 A.2d 282 (1985).
Speaking for the Court of Appeals in Watson v. Watson, 304 Md. 48, 61, 497 A.2d 794 (1985), Judge Lawrence Rodowsky wrote:
(Emphasis added).
Judge Rodowsky went on to discuss the legal effect of a judgment entered against a vendor after the contract has been made:
Watson, 304 Md. at 60, 497 A.2d 794 (emphasis added); accord, Caltrider v. Caples, 160 Md. 392, 396, 153 A. 445 (1931) (stating that "`[a] judgment obtained by a third person against the vendor, mesne the making [of] the contract and the payment of the money, cannot defeat or impair the equitable interest thus acquired, nor is it a lien on the land to affect the right of such cestui que trust.'" (quoting Hampson, 2 H. & J. at 66)).
In Himmighoefer, the Court of Appeals elaborated on this aspect of the doctrine:
302 Md. at 279, 487 A.2d 282 (emphasis added) (citations and quotations omitted) (quoting Stebbins-Anderson Co. v. Bolton, 208 Md. 183, 187-88, 117 A.2d 908 (1955)).
"[I]t is elementary that either party to a contract may waive any of the provisions made for his benefit." Twining v. Nat'l Mortg. Corp., 268 Md. 549, 555, 302 A.2d 604 (1973). "`[A]lthough a party may waive a provision included in a contract for that party's sole benefit, a party cannot waive a contractual requirement that benefits both sides to the transaction.'" Cattail Assoc., Inc. v. Sass, 170 Md.App. 474, 500, 907 A.2d 828 (2006) (quoting Citadel Equity Fund Ltd. v. Aquila, Inc., 371 F.Supp.2d 510, 520 (S.D.N.Y.2005)). "Accordingly, the application of the doctrine of waiver when one party seeks to enforce a contract ... ordinarily requires a determination whether the condition was inserted in the contract solely for the benefit of the party seeking to enforce the contract despite its nonoccurrence." Id. (quoting 25 Samuel Williston, A Treatise on the Law of Contracts § 39:24 (Richard A. Lord ed., 4th ed.1992, Supp.2006)).
In the instant case, there is no question that the parties entered into a valid contract for Grant to purchase the property from Ganz and that the judgment lien against Ganz was entered after the execution of the contract but before settlement thereon. The central issue is whether the financing contingency in the contract of sale prevented equitable conversion from occurring at the time that the contract was made. Specifically, we need to decide whether the financing contingency prevented specific enforcement of the contract by Grant, which thereby would have precluded equitable conversion. See Watson, 304 Md. at 61, 497 A.2d 794 (stating that "[t]he commentators are in accord that equitable conversion takes place only if the contract is specifically enforceable.").
Our review of the financing contingency in the contract indicates that it unquestionably benefitted Grant by making the contract
In addition, according to the financing contingency, from May 29, 2007 to July 13, 2007 (the 45 day period following the date of the contract ratification), the contract was "contingent on [Grant] obtaining approval for [a] loan[] to purchase the [p]roperty." Grant did not exercise that option, and the contract was not terminated by him. After 9 p.m. on July 13, 2007 (the "deadline" for providing Ganz notice by Form # 100 removing the financing contingency), the contingency, by its express terms, continued unless it was satisfied. After passage of the deadline, Ganz had the option to give notice to Grant that the contract would become void if Grant failed to deliver Form # 100 within three days. Ganz did not exercise this option, and the contract continued to be in effect.
Instead, on July 31, 2007, Grant and Ganz met for settlement on the property, and Grant tendered the full amount of the purchase price. At that time Ganz had no option or discretion under the contract not to convey the property to Grant. Thus, if Ganz had refused such conveyance, specific performance of the contract was available to Grant. See Watson, 304 Md. at 61, 497 A.2d 794 (stating that "[w]hen the money is paid according to the terms of the contract, the vendee is entitled to a conveyance, and to a decree in Chancery for a specific execution of the contract, if such conveyance is refused.").
We conclude that the financing contingency consisted of conditions subsequent. Neither party took advantage of the conditions permitting termination of the contract, so that the contract continued in effect. Therefore, the financing contingency did not prevent the occurrence of equitable conversion at the time of the execution of the contract. Accordingly, on July 24, 2007, when the circuit court entered a confessed judgment against Ganz, equitable title to the property was held by Grant, and the judgment could not attach as a lien on the property. Grant's claim of equitable title was superior to that of the Kahns as judgment creditors. The circuit court erred in coming to a contrary conclusion.
The Kahns place great reliance on this Court's opinion in Chambers v. Cardinal. That reliance is misplaced.
In Chambers, the appellant and Richard Chambers were divorced on April 17, 2003. 177 Md.App. at 422, 935 A.2d 502. On August 18, 2003, the appellant obtained a judgment against Chambers in the amount of $21,950. Id. By that time, Chambers had remarried and owned a parcel of real property with his new wife, as joint tenants. Id. Thereafter, on October 17, 2004, the Chamberses entered into a contract to sell said property to the appellees and on February 8, 2005, conveyed said property by deed to the appellees. Id. As of February 8, 2005, the appellant had not attempted to execute on her judgment. Id. Subsequently, the appellant filed suit seeking a declaratory judgment that she had an enforceable judgment lien on the appellees' property. Id.
This Court first observed that a joint tenancy could be terminated in a variety of ways, one of which was "when a creditor obtains a judgment against one of the joint tenants and levies upon the property in
The appellant thus had to find a severance of the joint tenancy prior to the conveyance of the property in order for her judgment lien to attach to the Chamberses' interest. Id. at 432, 935 A.2d 502. The appellant argued that the contract of sale of the property to the appellees terminated the joint tenancy of Chambers and his wife. Id. We disagreed, because under the doctrine of equitable conversion, the contract of sale vested equitable ownership of the property in the appellees, leaving only bare legal title in the Chamberses, and "a judgment creditor of a debtor holding bare legal title to property cannot attach the equitable interest in the property, as it is vested in another." Id. at 433-34, 935 A.2d 502 (quotations omitted). We thus concluded that, "regardless of the effect of the contract of sale on the joint tenancy, the contract divested [] Chambers of any interest in the Property to which appellant's lien could attach." Id. at 432, 935 A.2d 502.
In the course of our discussion of equitable conversion, we included the following footnote:
Id. at 433 n. 7, 935 A.2d 502.
Simply stated, these comments are dicta. We did not have the contract before us in Chambers in order to determine whether there were any contingencies that would have prevented the contract from being specifically enforced. Moreover, there is no rule providing that the existence of any contingency acts to prevent equitable conversion. Therefore, Chambers does not control the outcome of the instant appeal.
Finally, Grant claims that "sound public policy" dictates that the decision of the circuit court be reversed. Grant reasons that the trial court's decision "endangers the free transferability of residential real property" by exposing buyers to significant risks associated with sellers who have "poor credit histories or financial difficulties." The Kahns counter that a reversal of the circuit court's decision "would implicitly allow judgment debtors to remove their real estate assets from the grasp of their judgment creditors by entering into non-binding contracts of sale which can be unilaterally nullified by their putative purchasers simply by giving notice." We agree with Grant.
Under the Kahns' theory, a buyer entering into a contract of sale with a financing contingency would be exposed to the risk of judgment liens entered against the seller after the execution of the contract. These liens could affect the sale itself where, for example, the total of all liens or encumbrances on the property exceed the purchase price, and the judgment creditor
