Understanding Ground Rent In Maryland

Real Estate and Other Housing
Homeownership
Understanding Ground Rent in Maryland

Understanding Ground Rent in Maryland

Topics on this page:

What is Ground Rent? How do I understand if a residential or commercial property goes through ground lease? What if I can not get in touch with the ground lease holder? What takes place if I fail to pay ground rent? What does it mean to redeem ground lease? Just how much does it cost to redeem ground rent?

What is Ground Rent?

In certain situations, a house owner owns your house they live in but not the land your house sits on. Someone 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 rent payments from the owner of the home that lies on their land. These payments are referred to as ground lease.

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

Ground rent offers are different from typical property manager and renter relationships. This is due to the fact that the ground lease owner has no right to reclaim any residential or commercial property unless the occupant does not pay rent. 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 house owner stops working to make the needed payments. If the leaseholder is present 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 enhancements on the land, consisting of improvements made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The property owner has the authority to change, redesign, and rebuild the residential or commercial property as they want, however they need to guarantee that their actions protect the worth of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole obligation of the property owner to acquire and make payment on any utilities that service the residential or commercial property.

How do I understand if a residential or commercial property is subject to ground rent?

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 suitable ground rent. If the residential or commercial property is listed as "Fee Simple," the listing consists of both your house and the residential or commercial property (ground) in the purchase price - there is no ground lease. If there is an indicator of "Ground Rent" in a listing, it indicates that a cost 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 wanting to acquire a home, you can figure out if a residential or commercial property is subject to payment of a ground lease 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 lies. Oftentimes, a deed for several ground leas owned by one owner will be composed. Land records can be found on the website mdlandrec.net.

Maryland law needs that ground lease holders register 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 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 obliged to pay the ground lease to the ground lease holder. You ought to call the owner noted on the registration form concerning payment of the ground lease or to notify the owner that you want to redeem your ground rent. It is also your duty to notify the ground lease holder if you alter your address or transfer ownership of the residential or commercial property. If you are a ground rent tenant (property owner) 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