Understanding Ground Rent In Maryland

Real Estate and Other Housing
Homeownership
Understanding Ground Rent in Maryland

Understanding Ground Rent in Maryland

Topics on this page:

What is Ground Rent? How do I understand if a residential or commercial property goes through ground rent? What if I can not contact the ground lease holder? What takes place if I fail to pay ground lease? What does it indicate to redeem ground rent? How much does it cost to redeem ground lease?

What is Ground Rent?

In specific circumstances, a homeowner owns your house they reside in but not the land your home rests on. Somebody else (the ground lease holder) owns the land and leases the land to the house owner. Under Maryland law, a ground lease holder is entitled to lease payments from the owner of the home that is located on their land. These payments are understood as ground rent.

Ground lease is most common in the Greater-Baltimore realty market but exists throughout Maryland. Ground rent payments typically range from $50 to $150 each year and are generally paid semi-annually (two times a year). The language of the ground lease will set out the conditions of payment. A ground rent lease is normally for 99 years and renews indefinitely.

Ground lease deals are various from normal landlord and occupant relationships. This is since the ground lease owner has no right to take back any residential or commercial property unless the renter does not pay rent. That is, the ground lease holder doesn't have a reversionary right to the residential or commercial property or any structures constructed on it unless the homeowner fails to make the needed payments. If the leaseholder is current with their ground rent payments, the residential or commercial property stays under their control.

The homeowner is accountable for upkeep of the land and any improvements on the land, including enhancements made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The house owner has the authority to modify, renovate, and reconstruct the residential or commercial property as they wish, however they need to guarantee that their actions preserve the worth of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole duty of the house owner to obtain and pay on any utilities that service the residential or commercial property.

How do I know if a residential or commercial property undergoes ground rent?

When a residential or commercial property is noted for sale, the residential or commercial property description should note whether the residential or commercial property has any appropriate ground rent. If the residential or commercial property is noted as "Fee Simple," the listing includes both your home and the residential or commercial property (ground) in the purchase cost - there is no ground lease. If there is an indicator of "Ground Rent" in a listing, it suggests that a cost must be paid to the owner of the ground on which the residential or commercial property sits.

If you own a home, or are seeking to buy a home, you can figure out if a residential or commercial property goes through payment of a ground rent by taking a look at the deed. Ground rent deeds are submitted in the land records of the Circuit Court in the county where the residential or commercial property lies. In most cases, a deed for several ground rents owned by one owner will be composed. Land records can be discovered on the site mdlandrec.net.

Maryland law requires that ground lease holders sign up ground rent leases on the Maryland State Department of Assessments and Taxation's (SDAT) Ground Rent Registry. If you are unsure that your residential or commercial property has a ground lease, you can see the registration status through SDAT's Real Residential or commercial property Search. (When seeing the residential or commercial property record, click "View Ground Rent Redemption")

If a ground lease is registered for your residential or commercial property, you are bound to pay the ground lease to the ground lease holder. You need to get in touch with the owner noted on the registration type regarding payment of the ground lease or to inform the owner that you want to redeem your ground rent. It is also your responsibility to notify the ground lease holder if you change your address or transfer ownership of the residential or commercial property. If you are a ground lease occupant (property owner) or leaseholder and you have a question, it is a good concept to get in touch with an attorney.

Read the law: Md. Code, Real Residential Or Commercial Property § 8-703