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 call the ground lease holder? What happens if I fail to pay ground rent? What does it suggest to redeem ground lease? Just how much does it cost to redeem ground lease?

What is Ground Rent?

In certain situations, a house owner owns the home they live in however not the land your house rests on. Someone else (the ground lease holder) owns the land and rents the land to the property owner. Under Maryland law, a ground lease holder is entitled to rent payments from the owner of the home that is located on their land. These payments are called ground rent.

Ground rent is most typical in the Greater-Baltimore genuine estate market however exists throughout Maryland. Ground lease payments generally range 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 and conditions of payment. A ground rent lease is generally for 99 years and restores forever.

Ground rent deals are various from regular proprietor and tenant relationships. This is because the ground lease owner has no right to reclaim any residential or commercial property unless the occupant does not pay lease. 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 property owner is accountable for upkeep of the land and any on the land, consisting of enhancements made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The property owner has the authority to modify, redesign, and rebuild the residential or commercial property as they wish, but they must make sure that their actions preserve the worth of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole responsibility of the homeowner to obtain and pay on any energies that service the residential or commercial property.

How do I know if a residential or commercial property goes through ground lease?

When a residential or commercial property is noted for sale, the residential or commercial property description must list 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 house and the residential or commercial property (ground) in the purchase price - there is no ground lease. If there is a sign 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 seeking to purchase a home, you can determine if a residential or commercial property goes through payment of a ground rent by taking a look 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 lots of cases, a deed for multiple ground leas owned by one owner will be written. Land records can be discovered on the site mdlandrec.net.

Maryland law needs that ground lease holders register 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 rent, you can view the registration status through SDAT's Real Residential or commercial property Search. (When viewing 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 obliged to pay the ground rent to the ground lease holder. You should call the owner listed on the registration form relating to payment of the ground rent or to notify the owner that you wish to redeem your ground rent. It is also your responsibility to inform the ground lease holder if you alter your address or transfer ownership of the residential or commercial property. If you are a ground rent tenant (property owner) or leaseholder and you have a concern, it is a great concept to call an attorney.

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