Owner can find information on ground rent in title deed

Mailbag

May 26, 2002

Dear Mr. Azrael,

I recently established ownership of my mother's property [after she died] in Baltimore County that has a ground rent from 1953.

I've received bills from the owner of the ground to pay the rent. I just paid $90 that I thought was for a full year. I've made a request to the ground owner to purchase the ground outright. The response I received was somewhat confusing.

She is requesting that I make [another] payment before she would sell it. She said the cost [of the ground] would be $1,500. Based on what I've read about ground rents, it sounds like the yearly ground rent is $90 if she is asking $1,500. How do I find out what is the true ground rent, when it is payable and is it payable once or twice a year?

Paul Pupek Baltimore

Dear Mr. Pupek:

For you to have good title to the ground rent, there should have been a deed by which the reversionary interest in the property was conveyed to you by the personal representative of your mother's estate.

If your deed was properly prepared, it should refer to your mother's title deed and should specify the terms of the ground rent. For example, the deed should recite whether the ground rent is $90 or $180 per year, and should give the dates of payment. So, to find out how much the ground rent is and when it's payable, the first place to look is in your title deed.

If the ground rent information is omitted from your title deed, the next place to look is in the deed by which your mother acquired title to the property. The same information should be included there. As a last resort, you could obtain a full title search of the property that would include the original lease by which the ground rent was established.

Obviously, if the ground rent turns out to be $90 per year, then the owner is wrong in demanding $90 semiannually.

You have an absolute right to purchase the ground rent. If the ground rent was created between April 6, 1888, and July 1, 1982, the price equals 8.33 times the annual rent stated in the lease. It is possible that the owner may agree to sell a $180 annual ground rent for $1,500.

But an owner may agree to sell the ground rent for less. In a negotiated sale (as opposed to a mandatory redemption), the time for settlement is also negotiated.

In a ground rent sale, it is customary for the purchaser to prepare a deed at his expense. To make sure that title is good and merchantable, the purchaser, at his expense, may obtain a title search from an attorney or title company.

The purchaser also pays the $25 recordation cost. Transfer and recordation taxes are also assessed at about 2 percent of the purchase price, which is paid by the purchaser in a mandatory redemption.

In a negotiated ground rent sale, the transfer and recordation taxes customarily are split equally by the seller and purchaser.

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