Understanding Ground Rent In Maryland

Real Estate and Other Housing
Homeownership
Understanding Ground Rent in Maryland
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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 undergoes 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 imply to redeem ground rent? How much does it cost to redeem ground rent?

What is Ground Rent?

In particular situations, a homeowner owns your house they live in but not the land the home sits on. Somebody else (the ground lease holder) owns the land and leases the land to the property owner. Under Maryland law, a ground lease holder is entitled to lease payments from the owner of the home that is located on their land. These payments are called ground rent.

Ground lease is most common in the Greater-Baltimore property market however exists throughout Maryland. Ground lease payments normally vary from $50 to $150 each year and are typically 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 normally for 99 years and renews indefinitely.

Ground lease offers are different from typical property manager and renter relationships. This is since the ground lease owner has no right to reclaim any residential or commercial property unless the renter 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 built on it unless the house owner stops working to make the required payments. If the leaseholder is present with their ground rent payments, the residential or commercial property stays under their control.

The homeowner is accountable for upkeep 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, renovate, and rebuild 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 house owner to obtain and make payment on any utilities 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 need to list whether the residential or commercial property has any applicable ground lease. If the residential or commercial property is noted as "Fee Simple," the listing consists of both your house and the residential or commercial property (ground) in the purchase cost - there is no ground lease. If there is a sign of "Ground Rent" in a listing, it indicates that a cost must be paid to the owner of the ground on which the residential or commercial property sits.

If you own a home, or are seeking to purchase a home, you can determine if a residential or commercial property undergoes payment of a ground rent by looking at the deed. Ground lease deeds are submitted in the land records of the Circuit Court in the county where the residential or commercial property is located. In a lot of cases, a deed for multiple ground rents owned by one owner will be written. 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 unsure 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 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 bound to pay the ground lease to the ground lease holder. You must get in touch with the owner listed on the registration kind regarding payment of the ground rent or to inform the owner that you want to redeem your ground rent. It is also your responsibility to inform the ground lease holder if you alter your address or transfer ownership of the residential or commercial property. If you are a ground lease occupant (house owner) or leaseholder and you have a concern, it is a good concept to contact an attorney.

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