Montgomery County is one of the most active real estate markets in the D.C. metro area. Homes move quickly, offers go in fast, and buyers often feel pressure to waive contingencies or skip steps to stay competitive. Your agent is focused on getting you to close. That’s their job. But there are legal risks baked into the Montgomery County buying process that most agents either don’t fully understand or don’t have time to explain during a bidding war. Grant, Riffkin & Strauss, P.C. in Rockville has represented buyers and sellers across Montgomery County for years, and the issues that catch people off guard at settlement tend to fall into a few predictable categories.
Title Problems That Don’t Show Up Until It’s Almost Too Late
A title search is supposed to surface any liens, encumbrances, or ownership disputes before you close. And it usually does. But “usually” is doing a lot of work in that sentence.
One of the more common title issues in Montgomery County involves unreleased deeds of trust. A prior owner paid off their mortgage, but the lender never recorded the release with the county. On paper, there’s still a lien against the property. The title company will typically work to get this resolved before closing, but if the lender has been acquired, merged, or gone out of business, tracking down the entity authorized to issue a release can take weeks. If you’re on a tight closing timeline, which in Montgomery County you almost certainly are, this kind of delay can threaten the deal.
Boundary disputes and encroachments are another area where title searches alone don’t tell the full story. The title search confirms legal ownership based on recorded deeds, but it doesn’t tell you that the neighbor’s fence is three feet onto the property you’re buying, or that the seller’s deck extends past the property line onto county right-of-way. A survey would catch these issues, but surveys aren’t required in Maryland and many buyers skip them to save $400 to $800. That’s a gamble that occasionally costs much more.
Estate-related title complications surface regularly in a county with Montgomery County’s demographics. A property being sold out of a deceased owner’s estate may have title issues if the personal representative’s authority wasn’t properly established through the Orphans’ Court, or if there are heirs who weren’t properly notified. These situations require careful legal review, not just a standard title search.
HOA and Condo Liens: The Risk Most Buyers Underestimate
Montgomery County has a dense concentration of condominiums and homeowner association communities, from the high-rises in Bethesda and Silver Spring to the townhome communities spread across Germantown, Gaithersburg, and Clarksburg. If you’re buying in an HOA or condo association, the lien risk is real and often misunderstood.
Under Maryland law, condominium associations have what’s called a “super-priority” lien for up to six months of unpaid assessments. This lien can take priority over a first mortgage in certain circumstances. That means if the seller hasn’t been paying their condo fees, the association’s claim against the property can survive the sale and become your problem unless it’s specifically addressed at settlement.
The resale certificate (or resale package) that the seller is required to provide under the Maryland Condominium Act is supposed to disclose the financial health of the association, any pending special assessments, and any amounts the unit owner currently owes. Buyers are entitled to this package and have a right to void the contract within a specified period after receiving it. But in a fast-moving market, some buyers barely glance at the resale package before waiving their review period. That’s a mistake.
A resale package that reveals an upcoming special assessment of $15,000 for roof replacement or a reserve fund that’s critically underfunded tells you something important about what you’re actually buying. Not just the unit, but a share of the association’s financial obligations. If you don’t read the package carefully, or don’t have someone read it who understands what to look for, you can close on a property and get hit with a five-figure assessment notice within months.
Settlement Day Surprises in Maryland
Maryland doesn’t require buyers to have an attorney at settlement. Many buyers rely on the title company to handle everything. Title companies are competent at processing paperwork, but they’re not your advocate. They’re a neutral party facilitating the transaction. The difference matters when something unexpected comes up at the settlement table.
One recurring surprise involves the allocation of transfer and recordation taxes. Maryland imposes both, and Montgomery County adds a local transfer tax on top of the state tax. The customary split between buyer and seller in Montgomery County is for each party to pay their respective share, but “customary” isn’t the same as “required.” The contract governs who pays what, and if the contract language is ambiguous or if your agent used a template without adjusting the tax allocation, you might be looking at an unexpected line item of several thousand dollars at closing.
Another common issue is the handling of property tax prorations. Montgomery County property taxes are billed in arrears. Depending on when your settlement falls relative to the billing cycle, the proration calculation can either work in your favor or against it. Sellers sometimes owe a credit to the buyer for taxes that have accrued but haven’t been billed yet. If this isn’t calculated correctly on the settlement statement, the buyer absorbs a cost that should have been the seller’s responsibility.
Rent-back agreements have also become more common in competitive markets where sellers need extra time after closing before vacating. These arrangements create a landlord-tenant relationship, even if it’s only for a few days, and they need to be documented properly. A handshake agreement that the seller will be out by next Friday gives you no legal recourse if they’re still there two weeks later. Maryland’s landlord-tenant laws would apply, and evicting a holdover occupant from your own home is exactly as unpleasant as it sounds.
Why Grant, Riffkin & Strauss, P.C. Reviews Contracts Before You Sign
The time to catch these issues is before you’re sitting at the settlement table, not during. Having an attorney review your purchase contract, the title commitment, the resale package (if applicable), and the settlement statement before closing gives you a layer of protection that the title company and your agent aren’t designed to provide.
A contract review by a real estate attorney typically costs a fraction of what a single missed issue can cost you after closing. It’s one of the few places in the home buying process where a small upfront investment has an outsized return in risk reduction.
