Many Maryland residential properties are subject to Ground Rent (aka Ground Lease). That is when a landowner leases unimproved land to a tenant who agrees to erect a building on the land. Ground rent usually involves separate ownership of the land and the building. The tenant will "own" the building erected; but not the ground on which it was built. These rents are for a long term to make the transaction desirable (affordable) to the tenant investing in the building. The rents often run with the property and can be for 50 to 999 years and may be renewable and inheritable. Ground rents are actually "net leases" where the tenant must pay a rent fee on the ground, as well as real estate taxes, insurance, upkeep and repairs to the property.
In early days, it was a method to permit landholders the ability to retain rights to their land, collect an income indefinitely while permitting a leaseholder the ability to own his home. It sometimes made owning a home affordable in many parts of Maryland.
However, many of these leases go back to the early part of the 20th century and earlier. Original owners passed the title to these leases on in their wills. Over the years, however, ownership became harder to determine and owners hard to find. Yet the ground rents were still due and accruing. If a tenant failed to remit the ground rent, the building could be repossessed quickly and with little redemption rights.
In October 2007, the Maryland General Assembly reacted to a number of high visibility cases where homes were lost by tenant owners due to unpaid ground rent who were unable to find the owner or did not know that a ground rent existed. A new law was passed requiring ALL ground lease holders to register before September 30, 2010 or lose their right ever collect it again.
Registration filings must be either physically delivered to the Department's offices at 301 W. Preston Street, 8th Floor, Baltimore, MD 21201 by the close of business on September 29, 2010 or be postmarked to that same address BEFORE September 30, 2010.
Owners of ground rents who fail to register with the State of Maryland to claim to ground rents will no longer have any rights to collecting rents or to any buildings on same land.
Effective October 1, 2009, the fee for registering a ground lease increased to $5.00 for each additional ground lease after the $10.00 fee paid for the first ground lease.
For more information, call 410-767-2809 or visit http://www.dat.state.md.us/sdatweb/Register_groundrent.htm
