Refinancing possible, ground rent or not

MAILBAG

Mailbag

March 02, 2003

A reader writes to say that she owns property that carries ground rent that no one has paid in 20 to 30 years.

She has not been able to locate the owners of the ground rent, their estate or descendants.

She wants to refinance the loan on the property but her bank will conduct the transaction only for a fee simple property.

The reader says she needs to redeem the property and then settle on the loan and wants to know how to accomplish the task.

Dear reader:

Court proceedings would be necessary to wipe out the ground rent on your property.

The suit must detail good faith and reasonable efforts you have made to locate the owners of the ground rent or their heirs, if any.

Any such person who is located must be given notice of the lawsuit and would have an opportunity to appear and contest your claim.

If your search results are successful, you may "shoot yourself in your foot" by having to pay ground rent again after 20 to 30 years.

Assuming the judge were satisfied that the record owners of the ground rent are dead, and that they have no estate or descendants, the court could issue an order to "quiet title," by declaring that you own the fee simple interest in the property.

The attorneys' fees and costs involved in bringing this type of lawsuit may approach or exceed the value of the ground rent.

Since no one has asserted a claim to collect ground rent for many years, your best course may be to do nothing.

Many banks and mortgage companies will refinance property subject to a ground rent.

I suggest you find another lender to handle your refinancing.

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