If ground rent is unpaid, owner can get expenses


October 12, 2003

A law that went into effect Oct. 1 allows ground rent owners to collect specified expenses for unpaid ground rent, provided the leasehold owner is given notice.

The ground rent owner must send by first-class mail a notice to the leasehold owner at the owner's last address, which is shown on property tax records of the State Department of Assessments and Taxation (www.dat.state.md.us). The ground rent owner must obtain a certificate of mailing from the post office.

The notice must state in 14-point bold type the amount of the past due ground rent and inform the leasehold owner that if the rent is not paid within 30 days, the ground rent owner may take further steps. That is likely to result in the leasehold owner's becoming liable for certain collection expenses.

If the back ground rent is paid within the 30-day period, no collection expenses may be charged.

If the ground rent remains unpaid, the ground rent owner may file an ejectment action to terminate the ground lease and recover legal ownership of the leasehold improvements. Before filing an ejectment suit, a ground rent owner seeking to collect expenses must send a second mailing that includes a bill for the past due ground rent and the allowed expenses.

The second notice must be sent to the leasehold owner by certified mail, return receipt requested, at the leasehold owner's last known address. It also must be sent by first-class mail to the title attorney or title agent listed on the leasehold owner's recorded deed to the property or on the intake sheet recorded with the deed.

If the back rent is paid within 45 days from the date of the notice, the ground rent owner also may collect a maximum of $500 for allowed expenses to cover notice expense, title abstract and title examination fees, judgment reports, and legal fees and expenses incurred in connection with an ejectment suit.

If the back rent and allowed expenses of $500 are not paid, the ground rent owner may file the ejectment action. The owner also may collect up to $300 for extra title fees and up to $700 for attorneys' fees.

As a result of the new law, title agents will require an escrow of three years' back ground rent and $500 in any title transfer when the ground rent owner cannot be found or is unknown.

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