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 know if a residential or commercial property undergoes ground rent? What if I can not get in touch with the ground lease holder? What happens if I stop working to pay ground lease? What does it suggest to redeem ground rent? How much does it cost to redeem ground rent?

What is Ground Rent?

In particular circumstances, a house owner owns your house they reside in however not the land your home rests on. Someone else (the ground lease holder) owns the land and leases the land to the property 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 referred to as ground lease.

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

Ground lease offers are various from typical property owner and renter relationships. This is due to the fact that the ground lease owner has no right to take back any residential or commercial property unless the tenant does not pay lease. That is, the ground lease holder does not have a reversionary right to the residential or commercial property or any structures developed on it unless the house owner stops working to make the needed payments. If the leaseholder is current with their ground lease payments, the residential or commercial property remains under their control.

The house owner is responsible for maintenance of the land and any improvements on the land, consisting of enhancements made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The homeowner has the authority to alter, redesign, and reconstruct the residential or commercial property as they want, but they need to guarantee that their actions protect the worth of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole obligation of the homeowner to obtain and make payment on any energies that service the residential or commercial property.

How do I know if a residential or commercial property is subject to ground rent?

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

If you own a home, or are aiming to buy a home, you can figure out if a residential or commercial property is subject to payment of a ground rent by looking at the deed. Ground rent deeds are filed in the land records of the Circuit Court in the county where the residential or commercial property lies. In most cases, a deed for multiple ground leas owned by one owner will be composed. Land records can be discovered on the website mdlandrec.net.

Maryland law needs 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 uncertain that your residential or commercial property has a ground lease, you can view the registration status through SDAT's Real Residential or commercial property Search. (When seeing the residential or commercial property record, click on "View Ground Rent Redemption")

If a ground lease is registered for your residential or commercial property, you are obligated to pay the ground lease to the ground lease holder. You ought to call the owner noted on the registration type concerning payment of the ground rent or to notify the owner that you wish to redeem your ground rent. It is likewise your obligation to inform the ground lease holder if you change your address or transfer ownership of the residential or commercial property. If you are a ground rent occupant (homeowner) or leaseholder and you have a concern, it is an excellent idea to call a lawyer.

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