Understanding Ground Rent In Maryland

Real Estate and Other Housing
Homeownership
Understanding Ground Rent in Maryland

Understanding Ground Rent in Maryland
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Topics on this page:

What is Ground Rent? How do I understand if a residential or commercial property is subject to ground lease? What if I can not call the ground lease holder? What happens if I fail to pay ground lease? What does it mean to redeem ground rent? How much does it cost to redeem ground rent?

What is Ground Rent?

In specific situations, a property owner owns your house they reside in but not the land the home rests on. Someone else (the ground lease holder) owns the land and leases the land to the homeowner. Under Maryland law, a ground lease holder is entitled to lease payments from the owner of the home that is situated on their land. These payments are referred to as ground lease.

Ground rent is most common in the Greater-Baltimore property market however exists throughout Maryland. Ground lease payments normally vary from $50 to $150 per year and are normally paid semi-annually (two times a year). The language of the ground lease will set out the conditions of payment. A ground rent lease is usually for 99 years and renews forever.

Ground lease deals are different from typical property owner and renter relationships. This is because the ground lease owner has no right to reclaim any residential or commercial property unless the tenant does not pay lease. That is, the ground lease holder does not have a reversionary right to the residential or commercial property or any structures constructed on it unless the house owner fails to make the needed payments. If the leaseholder is current with their ground lease payments, the residential or commercial property stays under their control.

The house owner is accountable for upkeep of the land and any improvements on the land, including enhancements made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The homeowner has the authority to change, renovate, and rebuild the residential or commercial property as they wish, however they need to ensure that their actions maintain the worth of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole obligation of the homeowner to obtain and make payment on any energies that service the residential or commercial property.

How do I understand if a residential or commercial property goes through ground lease?

When a residential or commercial property is listed for sale, the residential or commercial property description ought to list whether the residential or commercial property has any appropriate ground lease. If the residential or commercial property is noted as "Fee Simple," the listing includes both your home and the residential or commercial property (ground) in the purchase rate - there is no ground rent. If there is an indicator of "Ground Rent" in a listing, it indicates that a fee needs to be paid to the owner of the ground on which the residential or commercial property sits.

If you own a home, or are looking to buy a home, you can figure out if a residential or commercial property goes through payment of a ground lease by taking a look at the deed. Ground lease deeds are filed in the land records of the Circuit Court in the county where the residential or commercial property lies. In lots of cases, a deed for several ground rents owned by one owner will be composed. Land records can be found on the site mdlandrec.net.

Maryland law needs that ground lease holders sign up ground rent leases on the Maryland State Department of Assessments and Taxation's (SDAT) Ground Rent Registry. If you are not sure that your residential or commercial property has a ground lease, you can see the registration status through SDAT's Real Residential or commercial property Search. (When seeing the residential or commercial property record, click "View Ground Rent Redemption")

If a ground lease is registered for your residential or commercial property, you are obliged to pay the ground rent to the ground lease holder. You must contact the owner noted on the registration kind concerning payment of the ground lease or to notify the owner that you wish to redeem your ground lease. It is likewise your obligation to notify the ground lease holder if you change your address or transfer ownership of the residential or commercial property. If you are a ground lease tenant (property owner) or leaseholder and you have a question, it is an excellent idea to call a lawyer.

Read the law: Md. Code, Real Residential Or Commercial Property § 8-703