Ground rent continues to be popular subject

MAILBAG

August 07, 2005

Readers continue to ask questions about ground rent. Here are recent queries, with answers:

Q: I've paid a ground rent for the past 32 years but now I'm interested in purchasing my ground rent. Is there an easy to follow set of instructions for this or do I need a lawyer or real estate agent for this transaction?

A: You should contact the ground rent owner and request to purchase (redeem) the ground rent. For most ground rents, the redemption price will be 16.667 times the annual rent. For example, the redemption price for a $120 annual ground rent is $2,000. The owner may accept a lesser price, but must sell at the redemption price.

The legal owner of the ground rent must execute and deliver a deed conveying the ground rent to you. The conveyance is confirmed by your recording the deed in the land records of the county where the real estate is located. You will want to verify that the person(s) signing the deed are the legal owners. An attorney or title company can assist by searching title to the ground rent; however, there will be a charge to you for a title search.

Q: I am a Harford County resident living in Joppatowne for the past 42 years. When I purchased my house in 1963, there was a ground rent attached. I have been in touch with Harford County many times, going so far as spending days in the courthouse to find out how I am taxed on something that I don't own (the ground upon which my house sits). The only answer that I have ever gotten after speaking with numerous people is "that's the way it is." How am I taxed on something that I do not own?

A: The ground rent is legally created by a lease recorded in the county land records. The lease requires you, as the owner of the leasehold interest, to pay the taxes on the property, including the land. The ground rent owner has the right to collect the annual ground rent free and clear of all expenses and taxes.

Q: I would like to discuss whether or not I should purchase the ground (rent) on my home. I am 79 years old and just recently paid my mortgage in full. My ground would cost me about $1,700, including the recording, whereas ground rent is $96 a year. What would be the advantage to my ownership? I hope to spend my remaining years here.

A: The main advantage to purchasing the ground rent is to avoid paying $96 a year. Owning the ground also will add value to your property in the event it is sold.

Since you don't intend to sell the property in the near future, my advice is to continue paying the $96 annual ground rent. You should make sure that your family knows the ground rent must be paid in the event you become disabled. Failure to pay ground rent can become costly if the ground rent owner institutes collection procedures.

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