Delinquent ground rent can lead to foreclosure

Mailbag

January 28, 1996

Dear Mr. Gisriel:

Where can I get the rules about ground rents? My mother owns several ground rents but some of the house owners never pay even after I write demanding payment. What are our legal rights?

Lou Kauffman

Baltimore

Dear Mr. Kauffman:

Under Maryland law, Section 8-100 et. seq. of the Real Property Article of the Maryland Annotated Code, if the ground rent payment is more than six months late, then the ground rent owner may file suit to foreclose legal title to the house, known as leasehold title. However, the owner of the house has the absolute right to redeem, that is, to pay the overdue ground rent plus the ground rent, owner's legal costs and expenses and keep title to the house up until the time a forfeiture decree is pTC signed by the judge. Further, under Section 8-107 of the same Real Property Article, if a demand for payment of ground rent is not made for 20 consecutive years to the house or leasehold title owner, then the ground rent is presumed to be extinguished and of no further effect. Finally, under Section 8-111 of the same article, a ground rent owner is legally entitled to demand and recover up to three years' unpaid back ground rent, but with no additional interest or late charges. Legitimate collection expenses such as legal fees may be added to the back ground rent owned.

Dear Mr. Gisriel:

My wife and I hold a 30-year fixed-rate mortgage at 8.25 percent with a balance of $120,000 and 25 years left on our mortgage. Our house is currently worth $185,000. We probably want to buy a new house in about five years. Should we think about refinancing?

Charles Benson

Catonsville

Dear Mr. Benson:

You should think about refinancing. Most mortgage lenders have a menu of mortgage programs that could fit your situation. Rates are very attractive now.

When considering whether to refinance, you should think about three issues:

* How long do you intend to stay in your present home? If the answer is less than two years, then you probably should not refinance. You will need to make the calculations based on the amount it will cost to refinance vs. the amount you will save in interest over the new mortgage term.

* What are your primary objectives in refinancing? Do you want to reduce the loan term and pay off the mortgage sooner, or do you want to reduce your monthly payments?

* Do you want a fixed-rate mortgage or an adjustable-rate mortgage (ARM)? Many younger homebuyers, who expect to move in the next few years, choose an adjustable mortgage because rates are usually lower. Families that expect to stay put awhile, five years or more, usually choose fixed-rate mortgages because these people often have less tolerance for risk.

Assuming that you intend to stay in your home for a while, consider a 15-year fixed-rate mortgage -- or another term shorter than 30 years. This will increase your payments, but reduce the interest you will pay.

Remember, there is no perfect mortgage for everyone -- and no solid answer to whether you should refinance. Every family must do the math to see how the numbers work out.

And always shop around for the best rates and terms. They vary from lender to lender.

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