The ground underneath the sidewalk has deteriorated, leaving a hole for John Roros to repair in front of his Highlandtown rowhouse. Under normal circumstances, he knows he would be responsible for the work.
But he has paid an annual ground rent of $35 for the past 25 years.
"All I know is that the land belongs to someone else, and I have to pay the rent," said Roros, 62, who had hoped the person who owned the ground rent would be forced to fix the sidewalk.
It's not that simple.
With ground rent, it never is.
Because this real estate peculiarity is so misunderstood, it sometimes creates an unfounded fear of doing business in Maryland among lenders and potential homebuyers, according to several real estate brokers, title agents and attorneys.
Ground rents "can be deal breakers," said Sally Griffin, a Coldwell Banker Residential Brokerage manager.
Historically, ground rent was an annual fee that homeowners paid to live on someone else's land. In Maryland, today's version of ground rent has evolved from its English ancestor into a situation in which homeowners technically own their land but still pay an investor who possesses a right to collect rent from it.
Maryland is one of a few states where residential ground rent exists.
The rents make their most durable imprint on the longstanding rowhouse developments in and around Baltimore. There's no database listing of the state's ground rents, but they number in the tens of thousands.
Several professionals in the real estate industry estimate that up to 50 percent of residential properties in Baltimore are subject to a ground rent.
"I assumed that ground rent didn't exist on my block," said Griffin, who lives in Catonsville. "But then I discovered recently that one of the properties down the street has one. Bad assumption. ... They can exist anywhere."
Ground rent typically ranges from $40 to $200 a year. The rents theoretically never expire because most are governed by 99-year leases that automatically renew. The people who collect payment, known as ground rent owners, value the investment as a commodity because of its inherent stability.
Many real estate professionals consider these payments akin to an interest-only mortgage on the land. And, as with all mortgages that go unpaid, the bank, or in this case the ground rent owner, can retaliate by seizing the land and the property that it rests on, though this rarely occurs.
