Md. ground rent inventory begins

Registration of more than 100,000 entries expected to take 3 years

October 02, 2007|By Melissa Harris | Melissa Harris,Sun reporter

Maryland began a three-year effort yesterday to catalog all of its ground rents as part of a legislative initiative to reform the centuries-old system that has cost some homeowners their dwellings because of small unpaid sums.

Ground rent owners have until September 2010 to complete a two-page form identifying each holding, or else lose their investments. It is estimated that 115,000 ground rents exist in Baltimore City and Baltimore and Anne Arundel counties.

"One of the reasons this is going to be useful is that no one knows definitively how many ground rents there are," said Robert E. Young, associate director of the State Department of Assessments and Taxation, the agency charged with building and maintaining the registry. "The number may be as high as 150,000."

The accounting effort follows a Sun series that documented how a few of Baltimore's largest ground rent owners were seizing hundreds of homes and charging homeowners thousands of dollars in fees over delinquent bills. The homeowners couldn't find the ground rent owner or said they didn't receive the bills and legal notices.

This year, the General Assembly banned the creation of new ground rents and ejectment - the process ground rent owners used to take the home, resell it and pocket the proceeds. Now the ground rent owner must file a lien, which allows the homeowner to get the remaining equity back once the debts are satisfied.

The registry, which will cost $267,000 to operate for the first year, was designed to increase accountability in the system.

Homeowners will be able to find names and addresses for ground rent owners and their agents. Potential buyers will be able to learn whether an attractive property falls under the system.

"A big problem for us is that when we go to transfer properties, we sometimes don't know who the current ground rent owner is," said Carolyn Blanchard Cook, deputy executive vice president of the Greater Baltimore Board of Realtors. "Title companies have to hold money back from the seller in these transactions, and that's difficult for them to understand."

The form requires ground rent owners to list the property's address, the name of the tenant, the deed information, when the lease was created, the amount of the rent, when it's due and mailing addresses for the lease holder and agents.

To encourage ground rent holders to file the paperwork soon, the General Assembly created a graduated fee system: $10 for the first ground rent and $3 for each subsequent one registered during the first year of the operation.

The $3 fee increases to $4 in the second year and $5 in the third.

"The public has got to understand that we have to wait until the owner registers with us to provide them with any information," Young said. "That may be up to three years."

But ultimately, the judiciary may decide whether the registry succeeds. The fee structure and the state's power to eliminate a ground rent for failure to register could face a legal challenge.

Charles J. Muskin, a trustee of his grandfather's estate, which includes about 300 ground rents, filed and then withdrew a challenge to the registry requirement in Anne Arundel County Circuit Court this year.

Muskin, a master in the Circuit Court, said yesterday that the lawsuit was "premature" and that he wanted to wait for the reforms to launch.

"It's going to cost me $40 to $50 per ground rent to do all of the work necessary to register, and we have many ground rents that only generate $10 to $20 per year in income," he said. "It's an unreasonable financial obligation. ... I'm not going to spend three years' worth of income to record an asset that's already been recorded once."

The easiest way to access the new information is the Department of Assessments and Taxation's "real property" database - an online catalog of parcels, their values, sales history and the buildings on them. If a property has a ground rent lease, a link will appear on the Web page, which takes viewers to the lease holder's information. That page will include a link to an image of the ground rent deed.

Court clerks and state archivists have already created digital images of the deeds - but some lack ground rent information, Young said.

"In some places, we have good records, and in others, we don't," Young said.

melissa.harris@baltsun.com

Registry online

To search for property and ground rent information in Maryland, go to sdatcert3.resiusa.org/rp_rewrite. This site will be updated as owners register.

To register a ground rent, go to www.dat.state.md.us/sdatweb/Register_gro undrent.htm. To read previous articles on ground rent, go to baltimoresun.com/groundrent.

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