Understanding Ground Rent In Maryland

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Understanding Ground Rent in Maryland
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Understanding Ground Rent in Maryland

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 contact the ground lease holder? What takes place if I fail to pay ground rent? What does it indicate to redeem ground lease? Just how much does it cost to redeem ground lease?

What is Ground Rent?

In certain situations, a homeowner owns your home they reside in but not the land your home sits on. Somebody 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 lies on their land. These payments are called ground rent.

Ground lease is most common in the Greater-Baltimore realty market however exists throughout Maryland. Ground lease payments generally range from $50 to $150 each year and are usually paid semi-annually (twice a year). The language of the ground lease will set out the terms and conditions of payment. A ground rent lease is generally for 99 years and restores forever.

Ground lease offers are various from regular property manager and tenant relationships. This is because the ground lease owner has no right to take back any residential or commercial property unless the occupant does not pay lease. That is, the ground lease holder doesn't have a reversionary right to the residential or commercial property or any structures developed on it unless the homeowner stops working 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 responsible for maintenance of the land and any enhancements on the land, including improvements made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The property owner has the authority to change, redesign, and reconstruct the residential or commercial property as they wish, but they should make sure that their actions protect the value of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole responsibility of the homeowner to procure and pay on any utilities that service the residential or commercial property.

How do I know if a residential or commercial property is subject to ground lease?

When a residential or commercial property is listed for sale, the residential or commercial property description need to note whether the residential or commercial property has any applicable ground lease. If the residential or commercial property is noted as "Fee Simple," the listing includes both your house and the residential or commercial property (ground) in the purchase rate - there is no ground rent. If there is a sign of "Ground Rent" in a listing, it shows that a charge should be paid to the owner of the ground on which the residential or commercial property sits.

If you own a home, or are wanting to purchase a home, you can determine if a residential or commercial property undergoes payment of a ground lease by looking at the deed. Ground rent deeds are submitted in the land records of the Circuit Court in the county where the residential or commercial property is located. Oftentimes, a deed for multiple ground leas owned by one owner will be composed. Land records can be discovered on the website 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 uncertain that your residential or commercial property has a ground rent, you can view the registration status through SDAT's Real Residential or commercial property Search. (When viewing the residential or commercial property record, click on "View Ground Rent Redemption")

If a ground lease is registered for your residential or commercial property, you are obligated to pay the ground lease to the ground lease holder. You ought to call the owner noted on the registration type regarding payment of the ground rent or to inform the owner that you want to redeem your ground lease. It is also your responsibility to alert the ground lease holder if you change your address or transfer ownership of the residential or commercial property. If you are a ground lease renter (homeowner) or leaseholder and you have a question, it is an excellent concept to call a lawyer.

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