Nguyen and Mai, who now lives in California, said they never saw a posting on the property and never received written notice of the proceedings. Charles C. Roberts, an attorney for Mai, said he filed a motion on behalf of his client the day before the auction in an attempt to get the court to return the property to his client.
"The most recent address for the defendant was not used in the proceedings," Roberts said.
Real estate experts said cases such as the Nguyens' are rare because everyone with an interest in the property, including a mortgage holder, must be given notice.
"It's a landlord-tenant situation, and it would be the same thing as a failure to pay rent," said Carolyn Cook, deputy executive vice president with the Greater Baltimore Board of Realtors. "It's more unfortunate in the ground rent situation because the person who owns the ground is also getting the improvement on the property. Unfortunately, the tenant, if it gets to ejection, loses all of it."
Bob Kern Jr., a real estate attorney with Gallagher Evelius & Jones in Baltimore, said it is unusual for people to lose their homes but that the danger of not paying ground rent is real.
"It's a lien second only to real estate taxes. ... The statute is real clear," he said.
State Sen. Nathaniel J. McFadden, a Baltimore Democrat, said yesterday that ground rent has outlived its usefulness and that he worries people will use ground rent to get homes from confused homeowners. He plans to introduce legislation to abolish it or at least get it "streamlined."
"That's a hell of a deal ... for such a little bit of money," he said. "In hot neighborhoods, you're talking about multiple hundreds of dollars. It's a nominal amount of money, but if you don't keep up with it, it can cause you to lose your property."
How ground rent works
Many homes in the Baltimore area have ground rents. That means the homeowner owns the house, but someone else owns the property and collects a set rent, usually $50 to $150 a year. Homes for sale on the multiple listing service are sold in fee simple, meaning there is no ground rent, or with a ground rent.
Homeowners have the right to buy out the ground rent at any time. By state law, a purchase price is determined by dividing the annual ground rent by a rate of redemption that depends on the year the lease was created. Leases created between April 6, 1888, to July 1, 1982, for example, carry a 0.06 percent rate. That means it would cost $2,000 to redeem a property with a $120 annual ground rent.