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 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 rent? What does it imply to redeem ground lease? How much does it cost to redeem ground rent?

What is Ground Rent?

In certain situations, a house owner owns the house they live in but not the land the home rests on. Somebody else (the ground lease holder) owns the land and rents the land to the homeowner. Under Maryland law, a ground lease holder is entitled to lease payments from the owner of the home that lies on their land. These payments are referred to as ground lease.

Ground rent is most typical in the Greater-Baltimore real estate market however exists throughout Maryland. Ground lease payments typically range from $50 to $150 annually and are typically paid semi-annually (twice a year). The language of the ground lease will set out the terms of payment. A ground rent lease is usually for 99 years and restores forever.

Ground lease offers are different from regular property manager 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 renter 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 built on it unless the homeowner stops working to make the required payments. If the leaseholder is current with their ground lease payments, the residential or commercial property remains under their control.

The homeowner is accountable for upkeep of the land and any enhancements on the land, made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The property owner has the authority to alter, redesign, and rebuild the residential or commercial property as they wish, but they need to ensure that their actions maintain the value of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole responsibility of the homeowner to acquire and make payment on any energies that service the residential or commercial property.

How do I understand 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 ought to list whether the residential or commercial property has any applicable ground lease. If the residential or commercial property is listed as "Fee Simple," the listing includes both your house and the residential or commercial property (ground) in the purchase rate - there is no ground lease. If there is an indicator of "Ground Rent" in a listing, it suggests that a charge should be paid to the owner of the ground on which the residential or commercial property sits.

If you own a home, or are looking to acquire a home, you can identify if a residential or commercial property goes through 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 is situated. In numerous cases, a deed for numerous ground rents owned by one owner will be written. Land records can be found on the site mdlandrec.net.

Maryland law requires that ground lease holders register ground lease 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 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 signed up for your residential or commercial property, you are obligated to pay the ground lease to the ground lease holder. You must get in touch with the owner listed on the registration kind concerning payment of the ground lease or to notify the owner that you want to redeem your ground lease. It is likewise 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 lease occupant (property owner) or leaseholder and you have a concern, it is an excellent concept to get in touch with a lawyer.

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