Assembly approves ground rent bills

O'Malley expected to sign measures modernizing system

General Assembly

April 06, 2007|By Laura Smitherman | Laura Smitherman,SUN REPORTER

The General Assembly gave final approval yesterday to four bills intended to modernize an antiquated ground rent system in Maryland, as the legislation cleared the last procedural hurdle before moving to Gov. Martin O'Malley's desk.

Final approval came when the House of Delegates approved Senate versions of the bills without changes.

The Assembly has been working on legislation for months to stem ground rent abuses, predominantly in Baltimore. Some ground rent holders levied large fees and seized hundreds of homes of owners who fell behind in payments, in some cases over minimal debts.

The bills that won final approval yesterday would prevent ground rent holders from selling leases without giving homeowners a chance to purchase them; require that the holders issue regular bills to homeowners; convert 19th- century ground rents to allow homeowners to buy them out; and limit the amount of back ground rent that a holder can collect for a property owned by Baltimore City.

"This is 2007, and when it comes to property ownership, you've got to bring it into the 21st century," said Sen. George W. Della, a Baltimore Democrat.

Legislators are ironing out technical kinks in two other bills, and final Senate action could come today.

Another bill that would extend low-interest loans to people who want to buy out the ground rent on their principal residence has cleared both chambers and is expected to receive final approval soon.

Gov. Martin O'Malley has said he will sign the bills. He already has signed a measure that bars the creation of new ground rents.

The legislative effort followed an investigation last year by The Sun. Under the ground rent system, which dates to Colonial times, homeowners rent the land under their houses from a person, charity or business. Maryland has about 115,000 ground rents, most in Baltimore.

"Our goal was not to be punitive but to modernize the ground rent process," said Del. Doyle L. Niemann, a Prince George's County Democrat who chaired a work group on the legislation.

Gary R. Alexander, a lobbyist for the Ground Rent Owners Coalition, said leaseholders would continue to lobby next year for a mechanism that would phase out the ground rent system by requiring people to buy out the rents when they purchase, transfer or refinance a home.

"We hope that the committees continue to look at the process that they created going forward to see how all of the new procedures really work and what they will cost," Alexander said. "The group we represented sincerely wanted redemption to end the process. They only wanted to be paid for their investment."

All of the bills have received wide backing in the legislature. Niemann said lawmakers tried to take a collaborative approach and took input from all interested parties. "There were no battlefields, because we addressed almost all of the issues in committee," he said.

Among the technical changes, lawmakers altered a bill barring the creation of new ground rents to ensure that it does not apply to mobile home parks. They also clarified that the prohibition on "ejectments" - a process in which ground rent holders can seize the homes of those who fall behind in payments - was on residential property, not commercial. The bills are meant to apply to residential property, and Niemann said they found no cases of ejectment of commercial owners.

Sen. Lisa A. Gladden, a Baltimore Democrat who sponsored the measures that received final passage yesterday, said the path to final passage of the ground rent bills has been more complicated than is typical for legislation in Annapolis because lawmakers wanted to be certain that they would withstand any legal challenge.

"We still had pushback from the ground rent owners who came down, and they kept reminding us that anything we do could be construed as a `taking,' and if that's the case, it would be seen as unconstitutional, and all that hard work we did and all the work the Sunpaper did would be down the toilet," she den said.

That is why two of the bills were held back for technical amendments after the original versions were passed by the House and the Senate. The attorney general's office took another look at the legislation to make sure they would pass constitutional muster, a task made more difficult because ground rent is a centuries-old legal institution, Gladden said. At one point, legislators brought in the state archivist to give them a history lesson on ground rent to make sure they were acting appropriately.

Gladden said she is confident the bills are "watertight."

"We're done, the bills are done, and we're ready for the governor's signature," she said.

laura.smitherman@baltsun.com

Sun reporter Andrew A. Green contributed to this article.

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