Ground Rent

Judges on Maryland's highest court questioned Monday a new law that requires people owning ground rents to register or lose them, an attempt by lawmakers to end the antiquated property laws. Charles J. Muskin, whose grandfather's estate had about 300 ground rents, contends that losing ground rents for failing to register them amounts to an unconstitutional taking of private property. Muskin, an attorney arguing the case on his own behalf, registered between half and two-thirds of his ground rents during the three-year window allotted in the 2007 law, calling the process cumbersome.

Dear Mr. Azrael: I have a home in Rodgers Forge that is subject to a ground rent, due semiannually. The ground rent was put in escrow by the mortgage company until December [of 1998]. At that time, I was informed by letter that the mortgage company would no long escrow the ground rent. The name and address of the ground rent owner was provided to me. Several months later, my mortgage was sold. In the subsequent confusion during the change of providers, I forgot to make the ground rent payment due in May [1999]

The ground rent on the little Baltimore house was an Evans family heirloom, passed through generations like a small jewel. Under an old practice that separated land ownership from the ownership of the house, their Cliftview Avenue lot paid the family $90 a year. Kathleen O'Hanlon found the deed, rolled and faded in a tiny zipper purse, before her mother, Margaret Evans Feeley, died in 2008. It passed to another Evans descendant on his 18th birthday the following year. But under Maryland's 2007 ground-rent reform, the paper became worthless on Sept.

I have a question regarding ground rent. I purchased an investment property last January, and the ground-rent owner remained unknown after a title search was completed. By law, the title company escrowed three years worth of ground rent. I refinanced the property in June but the ground-rent situation held up the process. The mortgage company needed to know who owned the ground rent or proof that no one owned it. A second title company completed a search and did not find the owner of the ground rent.

Several readers are interested in purchasing their ground rents from the owner. They want to know how the price is determined and what are the steps for purchase. Most ground rents in Maryland may be purchased by the owner of the leasehold property. The legal term is a "redemption" of the ground rent. The price is set by law. For most ground rents, the price is determined by dividing the annual ground rent by 6 percent. For example, the price for a $120 annual ground is $120 divided by .06, or $2,000.

Readers continue to ask questions about ground rent. Here are recent queries, with answers: Q: I've paid a ground rent for the past 32 years but now I'm interested in purchasing my ground rent. Is there an easy to follow set of instructions for this or do I need a lawyer or real estate agent for this transaction? A: You should contact the ground rent owner and request to purchase (redeem) the ground rent. For most ground rents, the redemption price will be 16.667 times the annual rent.

Dear Mr. Azrael: Please inform me how I can raise a ground rent. The ground property I have is valued or was valued about 30 years ago to be $1,500 with a 6 percent rent of $90 per year as of when the house was sold. The house has been sold about three times as of this date. Mrs. Helen Zeller Baltimore Dear Ms. Zeller: The amount of the ground rent cannot be raised. The rental amount is fixed in the original ground rent lease, which normally provides that the term is for 99 years, renewable forever.

Dear Mr. Azrael: My husband died two years ago without a will. The home had both our names on the deed, but because of some error, the ground rent, which we had redeemed about 20 years after buying the house, had only his name on it. I have had one lawyer who took my case but did nothing about it for over six months and kept putting me off. I now have another lawyer working on it but have heard nothing about it. No one seems to want to handle it. ...

Q: What is a ground rent? And should I redeem my ground rent?A: Many homeowners in Maryland do not own the land under their house. Instead, they pay a yearly ground rent to the true owner of the land -- or the fee simple owner.With ground rent, there are two owners: the fee simple owner, who owns the land; and the leaseholder, who owns the house and other improvements to the land but must pay rent to use the land.A Maryland ground rent lease typically runs for 99 years and is renewable forever.