Court ruling fair to ground rent owners

Ground rents are property that cannot be seized, Maryland's Court of Appeals correctly rules

November 03, 2011|By Charles Muskin

I am a member of a family of ground rent owners. The picture that has been painted of ground rent owners, in this newspaper and elsewhere, is misleading. I would like to set the record straight.

In recently striking down part of the ground rent registry statute, Maryland's highest court reminded the legislature (and The Sun's editors) that property rights are among the most sacrosanct of all rights enjoyed by the citizens and protected by our constitution. An individual's rights in property simply cannot be taken from that person and given to another. It must be remembered that ground rent owners purchased their rights in the same manner as anyone purchases property rights, subsequently recording the purchase in the land records.

Ground rents are often described, derisively, as a holdover from the Colonial era. In reality, all of our laws, whether dealing with property, contracts or banking, and even criminal matters, have their origin in old English law. Our entire mercantile system is based on Colonial law. Moreover, such statements ignore the fact that the majority of Baltimore's ground rents were created to promote affordable homeownership after World War II.

The claim in a recent Sun editorial that ground rent owners "seized" homes is erroneous. The former ground rent ejectment process took two full years before resulting in eviction, during which time the homeowner could stop the process by paying the rent. In fact, of the 541 homes allegedly "seized," most were abandoned, boarded-up properties, and the ground rent owners who obtained possession of them repaired them and returned them to the housing market. Instead of applauding these efforts, The Sun and other critics have inexplicably chosen to vilify all ground rent owners. I attended the 2007 legislative hearings, and not one person testified that they lost their home simply for failure to pay their small ground rent. Examples of people who ostensibly lost their homes for nonpayment of ground rent, including the infamous case of the Onheiser family, in reality did so because they failed to pay the real estate taxes on their homes for several years.

As for the notion that people were unaware they owed ground rent, this is simply unfathomable. It ignores the fact that the law requires that all original contracts for sale have a full page notice, printed in large, boldface type, notifying the home buyer of the ground rent and the consequences of not paying; that at settlement, the buyer again receives that notice; and finally, that the ground rent owner is required to send ground rent bills to the homeowner.

So where do we go from here? Throughout the legislative process resulting in passage of the new laws, ground rent owners offered many suggestions to buttress protections for homeowners — some granting more protection than that actually contained in the new laws. Every one of our suggestions was rejected. Now that the Court of Appeals has spoken, maybe the following ideas will be given renewed consideration.

•First, place all laws dealing with ground rents in one section of the Real Property Code, instead of having them scattered throughout.

•Second, simplify the process for homeowners to "redeem" or pay off ground rents. In many cases, this will reduce costs such as deed preparation and filing for the homeowner, which can be two or three times the actual amount of the ground rent.

•Third, put more responsibility on title companies to provide sufficient notice regarding ground rents to all parties at the time of settlement.

•Fourth, consider different ejectment procedures for homeowner-occupied and investor-owned ground rent properties. Homeowners deserve and often need more protections, as opposed to investment purchasers. However, the Court of Appeals' opinion made it crystal clear that the right of the ground rent owner to re-take the property if ground rent is not paid is fundamental.

Lastly, if the legislature really wants to "do away with ground rents," it should consider buying all ground rents in the state and then imposing a 30-year "front foot" type special tax on each homeowner whose home was formerly subject to ground rent.

I ask the legislature to move forward slowly, considering both sides of this issue and to enact responsible legislation, since I certainly don't want to be forced to return to the courts for protection.

Charles Muskin of Annapolis filed the lawsuit challenging the state's ground rent registry. His email is cjmuskin@yahoo.com.

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