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September 29, 2010

Last day to register a ground rent in Maryland

Got ground rent? State law says it will disappear in a puff of smoke if it isn't registered today in person or by mail (meaning postmarked Sept. 29).

That's part of the raft of legislative change ushered in after a Baltimore Sun investigation in 2006, which found that a few ground rent owners were using the Colonial system to seize hundreds of homes over unpaid bills.

One of the changes is the registry. The idea is to make it easier for people to keep track of who owns the land under their homes and how to reach them, since ground-rent holders don't always send bills. Some who inherited ground rents have no idea what the things are, for instance.

But ground-rent owners, especially those with more than a few of the items, say it takes time and money to collect the information required. One is suing, arguing that the law -- register or lose the ground rent -- is unconstitutional. So the fate of unregistered ground rents is uncertain until that case is concluded.

More in today's story, and I'll be working on a longer piece about ground rent for Thursday.

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (9)
Categories: Ground rent
        

Comments

Ground rent seems like such a nightmare to me. I had a coworker who bought a house in Edgewater a couple years ago who wasn't told it was a land rent situation and was almost evicted because he didn't know he was supposed to be making payments.

Is this system ever used in newer construction, or is it all in older buildings?

Yikes, Mary -- I'm glad he didn't lose his house.

The Sun reporters who wrote the ground-rent series found examples of investors creating new ground rents during the housing bubble years, but if memory serves, it was primarily on older homes rather than newly built ones.

The state outlawed the creation of new ground rents in 2007.

This is so stupid that is 2010 we are paying ground rent, what is next fees for being being a ex-slave............

I've never even heard of land rent. That would be a total bummer to not know you are renting, not owning the land your house is on. I can't imagine the feeling of finding out later, and more importantly, can you afford this unexpected expense.

MIke

Mike, if you bought title insurance and weren't notified about the ground rent I think that the title company. should cover it. Also there is some responsibility of the selling agent and the seller to disclose this. Also it almost always comes up during the title search and most mortgage companies pick this up and wont make a loan without dealing with it.

If the land is only rented, then why aren't the ground rent holders responsible for the taxes on the land?

@Diane - That's the $64,000 question right there. Because the people that started ground rent were the people with power/clout, so they got the best of both worlds - the power to collect $$$ on the land, and the freedom to not get taxed on it.

It is up to the seller (not the selling agent) to disclose if they know about it, but as The Sun's great investigation showed, often even the sellers didn't know about it. A good title company can find the info, but even for them it can be difficult!

Many mortgage companies will compel the buyer to redeem it, but not all. I have had several buyers in Canton with ground rent that they did not have to redeem to get the loan. And on top of that, they did not redeem it by choice because it was a $90 a year ground rent, and that would take about $2,000 to redeem. They didn't plan to be there more than 5-7 years, so they decided to save the $2k expense and just pay the ~$500 in ground rent over that span. All depends on situation.

If your deed says you own the property "in fee simple," then it is not subject to a ground rent (unless there's an error in the deed ...)

Yes indeed, Louis -- thanks for pointing that out.

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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