State wants ground-rent suit moved

December 14, 2007|By June Arney | June Arney,Sun reporter

State officials filed court papers yesterday to move a legal challenge to Maryland's new ground rent laws to federal court.

The state contends that the case belongs in the federal system because the plaintiffs claim the new law amounts to an unconstitutional taking of property without compensation.

The lawsuit was filed last month in Anne Arundel Circuit Court by dozens of Maryland's largest holders of ground rents. They contend that ground-rent reform laws effectively seized their property and seek compensation that could exceed $400 million.

"Any judge, state or federal, can see what's wrong with the new law," said Edward J. Meehan, an attorney with Skadden, Arps, Slate, Meagher & Flom LLP representing the ground-rent owners. "Apparently, though, the state has decided it's OK to prosecute its citizens in state court but isn't agreeable to the tables being turned."

Meehan is seeking class-action certification for the lawsuit.

State Attorney General Douglas F. Gansler has said he is confident the laws will be upheld.

The 23-page lawsuit alleges that the new laws render ground-rent leases worthless by making it too costly and cumbersome to collect rent or seize houses if rents aren't paid.

This year, the General Assembly overhauled the state's centuries-old system of ground rents, under which an estimated 110,000 Maryland homeowners pay rent on the land under their houses, after an investigative series in The Sun showed that a small group of investors had used power under the law to seize hundreds of homes in Baltimore over unpaid rent as low as $24. Several of those investors - but not all - are among the plaintiffs.

june.arney@baltsun.com

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