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 is subject to ground lease? What if I can not contact the ground lease holder? What takes place if I stop working to pay ground lease? What does it suggest to redeem ground rent? Just how much does it cost to redeem ground lease?

What is Ground Rent?

In particular circumstances, a property owner owns the house they live in but not the land your house sits on. Someone else (the ground lease holder) owns the land and leases the land to the homeowner. 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 called ground rent.

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

Ground rent deals are different from normal landlord and renter relationships. This is due to the fact that the ground lease owner has no right to reclaim 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 constructed on it unless the homeowner fails to make the required payments. If the leaseholder is existing with their ground rent payments, the residential or commercial property stays under their control.
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The property owner is accountable for upkeep of the land and any improvements on the land, including improvements made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The property owner has the authority to change, redesign, and rebuild the residential or commercial property as they wish, however they should make sure that their actions protect the worth of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole responsibility of the house owner to acquire and pay 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 listed for sale, the residential or commercial property description need to note whether the residential or commercial property has any applicable 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 cost - there is no ground lease. If there is an indicator of "Ground Rent" in a listing, it indicates that a fee should be paid to the owner of the ground on which the residential or commercial property sits.

If you own a home, or are wanting to purchase a home, you can identify if a residential or commercial property undergoes payment of a ground lease by looking at the deed. Ground lease deeds are filed in the land records of the Circuit Court in the county where the residential or commercial property lies. Oftentimes, a deed for numerous ground leas owned by one owner will be written. Land records can be discovered on the website mdlandrec.net.

Maryland law requires that ground lease holders sign up ground lease 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 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 signed up for your residential or commercial property, you are obliged to pay the ground lease to the ground lease holder. You should get in touch with the owner noted on the registration type regarding payment of the ground rent or to inform the owner that you wish to redeem your ground lease. 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 lease occupant (homeowner) or leaseholder and you have a question, it is a great idea to get in touch with an attorney.

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