Great information!! Wonderful post by a professional.

This is one of the best guest blogs you've had on here, Jamie. Explained very well in layman's terms, while also getting it right.As a fellow lawyer, I respect when other lawyers do that, rather than toss around jargon to confuse laypeople.

Off topic, but Jamie, I just saw this on another blog I read--wonder if you've seen it yet: http://housingstory.net/2011/03/30/spring-2011-guide-of-30-key-charts-to-see-before-you-buy-or-sell-your-home/

The way this blog lays out the statistics, it really makes all the Realtor-speak look foolish.

My neighbors just purchased a house in Pigtown & they were going to redeem the ground rent but the owner told them the price was $8K to redeem. I told my neighbors that was crazy. I heard there was a cap on the price a ground rent owner could charge, any truth in this statement? On average I've seen ground rent redemptions to be anywhere between $2-$4K but not $8K.
Thanks for the guest post!

@pigtown girl - I think you can actually handle a service (not a lawyer, just a service) that will handle all the aspects of redeeming the ground rent, getting the records for you, and attaching the redemption to your deed. When we bought our latest house a few months ago, we got information about this but didn't need it because the place doesn't have ground rent. Anyway, if I were your friend, I would look into having that service handle it. If you poke around Google you can probably get information. This way, you get it handled by someone who does this type of thing down all the time and can make sure it's done right.

Another thing I'd do if I was your friend: appeal the property assessment. Jamie has posted a blog entry before about this. You can appeal anytime of the yr if youre a new home buyer. You have 60 days from your closing to file your appeal.

There's some really interesting history and theory behind ground rent.

It's essentially a twist or build on Lockean natural rights that says while one owns the improvements that he makes or purchases from someone, one cannot own the earth itself. There's a "first to find" idea that essentially concludes no one can lay a natural rights claim to the unimproved earth. Thomas Paine was the first to seriously advance the idea as far as I'm aware in Agrarian Justice where he laid out the plans for a welfare state far more broad and generous than today's.

Henry George applied economic theory to the idea to argue that a tax on land was actually the most efficient tax possible since it did not alter behavior as did a tax on wages, profits, or consumption of finished goods.

chappy10, I hadn't seen those charts -- thanks for the link.

Glad you liked this guest post! Folks, if you have questions of a housing-related nature, let me know. I think this Q&A format works very well for a guest post -- and then there's no question that readers will find it useful.

If a ground rent tenant pays the ground rent after the due date, is the leaseholder allowed to charge interest or a late fee? I have several ground rents that are chronically paid several months late and while I don't have a problem if the rent is paid a few days late, it gets to be a problem when the ground rent is chronically paid, say, four months late, and then only after I have sent multiple bills by certified mail.

Jamie, thanks for responding, any chance you could add some links in your blogroll? I actually refer back to your blog when I want to check out some new sites. I don't see last week's guest blogger linked there, nor do I see that peter.net site (the one with the rent/buy comparison) linked there. I'm not sure if you controll the blogroll, but if you added a few new ones, it would be great... just a thought.

chappy10, I don't have direct control over my blogroll, which is why it hardly ever changes. But I'll see if I can get the web folks to update it for me.

Pigtown Girl: Remember, the redemption price usually is determined by the annual rent. Most rents are 16.66 times the annual rent, so if the rent is $120.00 per year, the redemption price is $2000.00. But there's an exception for "irredeemable rents", which may have been created prior to 1884. Since they're "irredeemable", the owner can charge any price. These are rare, and the owner must file certain papers to preserve the irredeemability. The neighbor's rent could be one of these. If not, the ground rent owner would be overcharging.

Ground Rent Leaseholder: Unfortunately, there is no legal authority for charging a late charge, although many ground rent owners do. The legislature has limited the collection procedures of ground rent owners, and that's why, in addition to the lawsuit challenging the registration process, there's another one pending which claims that the law which eliminated the process of ejectment is unconstitutional. We'll have to wait to see how Maryland courts decide that one.

My neighbors ground rent is around $100 a year, the property is assessed at a pretty decent value, my neighbors are getting a good deal. They are from Georgia so the ground rent is new to them. I looked up their property on the land records and the owner hasn't registered the ground rent with the city. They are going to bring that up with the owner and file the paper work the have the ground rent abolished. The property was built in 1900 so I don't think the ground rent is irredeemable.
My ground rent is $36 a year, I didn't have the funds to purchase the ground rent when I bought the house so I plan on doing so when I eventually refinance.

How should a homeowner deal with a situation like this...
The ground rent was purchased from the leaseholder in 3/10 and registered with the deed in Land Records

The ex-leaseholder registers the ground rent right at the registration deadline last fall even though it is no longer active. SDAT shows that the property still has a valid ground rent due to the registration.

To my knowledge, the Report of Redemption was never filed...

Thanks for any help!! We're so close to getting out from under this.

The ground registry at SDAT is a wonderful tool for those of us in the title industry as well as for consumers. That is until you find that there are ground rents being being registered on properties whose leases have been extinguished.

I had a client call today about a property he purchased in 2008. He was contacted by a ground rent owner who was seeking payment of 3 years back ground rent. When we went to closing the property was clearly listed as fee simple, pursuant to a merger deed that has been on record since 2006.

The client immediately sent the bill to his lender who in turn paid the "ground rent owner" for the past due ground rent and the collection fees associated therewith. As a result his escrow account has a deficit and his monthly payment has been adjusted to reflect that shortage.

After looking over his HUD-1 and Deed from our settlement he called me to inquire as to why we conveyed this property to him in fee when in fact there is a ground rent? I immediately pulled the file, checked and rechecked the chain of title, and got a copy of the ground registration from SDAT. The company who had filed the ground rent registry did reference the correct lease, but failed to realize that the lease had been extinguished. In addition, the company who filed the registry is not the company who was the owner of the lease to begin with. It is possible that they filed this registry in error given that this filing was an amended filing by this company to add several properties to their registry.

It does however make you realize that even if there is a ground rent registration filed with SDAT you still need to do the research to insure that the property is in fact subject to the ground rent and that there have not been any merger deeds filed that act to extinguish the ground rent.

A title search will reveal the existance of a lease or a merger deed. Don't take for granted that the ground rent registry is alway correct. Like any other data base the information is entered by humans. Information can be entered incorrectly or as may have happened here a property may have been erroneously registered.

Call on The Preferred Title Group, Inc. if you need us to do research for you on the existance of a ground rent.

Charlene Perry

Hi...My Mom holds a ground rent for a rowhouse in the city and wants to get rid of it. The ground rent is $90/yr, collected semi annually right now from Rosedale Federal. We have registered it as well. What are our options for getting rid of it? Do other people buy these? Would like to make the process as easy as possible, This forum and expertise is great. Thanks.