Ground rent bills advance

House approves reform package

Senate delays action on one bill Sun follow-up

General Assembly

March 21, 2007|By Laura Smitherman and Andrew A. Green | Laura Smitherman and Andrew A. Green,SUN REPORTERS

The Maryland House of Delegates unanimously approved eight bills yesterday aimed at modernizing the state's antiquated system of ground rents and stemming reported abuses of homeowners.

The General Assembly acted quickly this session on the legislation, spurred largely by cases of ground rent holders who levied hefty fees and seized hundreds of homes of residents who had fallen behind on payments, in some instances over minimal debts.

Legislators also said the overhaul was needed to bring transparency to a system, mostly used in Baltimore, that dates to Colonial times. The system, in which homeowners must pay rent on the land under their houses, was the subject of an investigation by The Sun last year.

Passage of the bills in the House drew spurts of applause when the final votes were read. Meanwhile, the state Senate tentatively approved identical versions of most of the bills yesterday, while action on one measure was delayed for a day in a routine procedural move.

The House approved bills that would create an online registry of ground rents and overhaul the process for ejectments, the mechanism by which homeowners can lose their houses over back ground rent. Other bills would prevent ground rent holders from selling leases without first giving homeowners a chance to purchase them and would extend low-interest loans to people who want to buy out the ground rents on their principal residence.

The Senate is expected to cast final votes this week, sending the bills to Gov. Martin O'Malley, who has pledged to sign them. He has repeatedly called the ground rent system "unfair and unjust."

The legislature had already approved a bill to prohibit the creation of new ground rents, and O'Malley has scheduled a signing ceremony for that bill for tomorrow.

"This is what good journalism and good government is about," said Sen. Lisa A. Gladden, a Baltimore Democrat, who sponsored her chamber's version of the ground rent bills.

R. Marc Goldberg, an attorney who owns ground rents and acts as a spokesman for the Ground Rent Owners Coalition, referred questions to Gary R. Alexander, a lobbyist the group retained.

Alexander said that his clients support many of the provisions in the bills considered this year but that he is looking at some of the measures to see whether they can be made fairer.

"There's no sense in leaving intact ground rents if the method of enforcement and the cost of enforcing delinquent ground rent is impossible to do," Alexander said. "That has always been a big concern."

Vernon Onheiser, who become a face of the movement to reform the ground rent system, has been invited to the bill-signing ceremony by the governor, whose office will dispatch a car to drive him and his sons to Annapolis because they have no other transportation. Onheiser almost lost the Canton home where he has lived for nearly five decades over what began as $24 in unpaid ground rent; his sister eventually paid the ground rent owner nearly $18,000 to satisfy the debt.

"I never asked the government for anything at all, but they have really helped a lot, and they are helping a lot of other people too," Onheiser said. "They are doing a very good job."

Some ground rent owners argued that parts of the legislation amount to an unconstitutional usurping of their property rights, while others defended the ground rents as legitimate investments. The origins of ground rent can be traced to the 1600s. More recently, developers used ground rents to make rowhouses more affordable for working people.

Alexander said ground rent holders had hoped the legislature would enact a system to phase out ground rents entirely by requiring that homeowners redeem them - that is, buy them out - whenever a property is sold or re-financed.

"All our people ever wanted was to get paid for their ground rents," Alexander said. "Unfortunately, we haven't reached that solution yet. We're hopeful that the General Assembly will consider some form of redemption."

In the past six years, ground rent owners have filed nearly 4,000 lawsuits; in more than 500 such cases, Baltimore City Circuit Court judges awarded possession of houses to ground rent holders. Many homeowners and legislators suspect that some of the ground lease holders aimed to abuse the system and take homes that had risen in value through gentrification.

Legislators said they sought to balance the interests of homeowners with the interests of ground rent owners, and Attorney General Douglas F. Gansler said the bills appeared to pass constitutional muster.

The legislation "does not eliminate ground rents. People can still have them as investments," said Del. Maggie L. McIntosh, a Baltimore Democrat, who chairs the Environmental Matters Committee that crafted the bills. "Let's watch it and let it work ... and hopefully we'll see a complete elimination of the mishaps, if you will, regarding ground rent."

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