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 is subject to ground lease? What if I can not get in touch with the ground lease holder? What occurs if I stop working to pay ground lease? What does it mean to redeem ground rent? How much does it cost to redeem ground lease?

What is Ground Rent?

In specific scenarios, a homeowner owns your house they live in but not the land the home rests on. Another person (the ground lease holder) owns the land and leases the land to the homeowner. Under Maryland law, a ground lease holder is entitled to rent payments from the owner of the home that is situated on their land. These payments are known as ground lease.

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

Ground rent offers are different from typical proprietor and occupant 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 rent. That is, the ground lease holder doesn't have a reversionary right to the residential or commercial property or any structures constructed on it unless the property 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 property owner is accountable for maintenance 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 alter, remodel, and rebuild the residential or commercial property as they wish, however they must guarantee that their actions protect the value of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole duty of the house owner to acquire and pay on any energies that service the residential or commercial property.

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

When a residential or commercial property is noted for sale, the residential or commercial property description need to list whether the residential or commercial property has any relevant ground rent. If the residential or commercial property is listed as "Fee Simple," the listing consists of both the house and the residential or commercial property (ground) in the purchase rate - there is no ground lease. If there is an indicator 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 wanting to acquire a home, you can identify if a residential or commercial property is subject to payment of a ground rent 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 is situated. Oftentimes, a deed for numerous 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 register 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 view the registration status through SDAT's Real Residential or commercial property Search. (When viewing 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 bound to pay the ground rent to the ground lease holder. You ought to call the owner listed on the registration type concerning payment of the ground lease or to notify the owner that you want to redeem your ground rent. It is likewise your obligation to alert the ground lease holder if you alter your address or transfer ownership of the residential or commercial property. If you are a ground lease tenant (house owner) or leaseholder and you have a question, it is a great concept to call an attorney.

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