baltimoresun.com

January 26, 2012

New proposal for ground-rent registry

For those of you with a vested interest in (or just curiosity about) ground rent: The newest twist in the saga is a bill aimed at the registry.

Fourteen state delegates have proposed that owners who don't register their leases with the state can't collect payments on them.

Here's a short piece about the bill, which comes after an appeals court ruling left the registry intact but struck down the penalty for not getting on the state's list by the 2010 deadline -- the ground rent ceased to exist. (That piece of the law was unconstitutional, Maryland's Court of Appeals ruled, and thus the leases popped back to life.) 

Here's the proposal itself.

If you're trying to find out whether a ground rent has been registered on a particular property, go to the state Department of Assessments and Taxation's property look-up site, type in the address and then click on the "ground rent registration" link in the upper right-hand corner. The registry is supposed to provide the owner's name and contact information.

Posted by Jamie Smith Hopkins at 6:30 AM | | Comments (4)
Categories: Ground rent
        

November 28, 2011

Thinking of redeeming your ground rent?

Louis Wilen, a Montgomery County resident who is a part-owner of a few ground rents, emailed me the other day to share his observations about when (and how) it's worth it for homeowners to buy out the ground rent on their property. I thought you'd be interested, so I'm turning today's blog post over to him in just a moment.

First, Ground Rent 101:

It's a longstanding quirk in our system, one that seems to separate the ownership of homes from the ground underneath them. If your home has a ground rent, you must pay a fee -- usually a relatively small one, twice a year -- to the owner of that investment. Or you can buy it outright, known as "redeeming" it.

Homeowners dealing with ground rent do actually own their land as long as they continue to pay. They officially have a "leasehold" interest in their home and ground, while the ground rent investor has a "reversionary interest." The ground rent works as a never-ending lien.

A Baltimore Sun series about abuses by big ground-rent owners prompted state legislators to pass a series of laws intended to reform the system. One of those changes was recently overturned by Maryland's highest court as unconstitutional because it zapped any ground rent that wasn't registered by owners before the end of September 2010. (A variety of mom-and-pop ground rent owners, the types who weren't seizing houses left and right over small unpaid bills, had complained that they had no idea until it was too late that the state had required registration.)

OK -- that should do. Take it away, Louis:

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With most ground rents yielding 6 percent (and some yielding 12 percent) based on the rent rate divided by their redemption value, most homeowners would save money by redeeming their ground rents, assuming that they have the cash to do so. Paying off a ground rent is essentially equivalent to putting money into a risk-free investment yielding 6 percent. Since there are no risk-free investments yielding 6 percent at this time, the financial benefit of redeeming a ground rent is clear.

Redemption of a ground rent requires payment of recording fees and transfer tax. The amount of the fees and taxes vary depending on the jurisdiction in which the property is located, but as an example, the government fees and taxes to redeem a $100 per year ground rent would be about $100. Also, if the parties need legal assistance to perform a title search, draw up the deed and perform settlement services, there could be additional costs of about $200 to $500.

Continue reading "Thinking of redeeming your ground rent?" »

Posted by Jamie Smith Hopkins at 6:12 AM | | Comments (14)
Categories: Ground rent
        

October 26, 2011

Did you get a 'certificate of extinguishment' on ground rent?

Hey, homeowners -- if there was a ground rent on your property that went unregistered and you applied for a "certificate of extinguishment," colleague Andrea Siegel would like to hear from you. (This week's Court of Appeals decision brings all the extinguished ground rent back to life, rendering the certificates invalid, the state says.)

You can email her at asiegel(at)baltsun.com.

Posted by Jamie Smith Hopkins at 3:32 PM | | Comments (0)
Categories: Ground rent
        

Court: Extinguishment of ground rents is unconstitutional

Just in time for Halloween: Night of the living ground rent.

Maryland's high court ruled 5-2 Tuesday that the state law extinguishing ground rents that weren't registered by last fall violates Maryland's constitution, bringing potentially tens of thousands of them back from the dead. The Court of Appeals said it's fine to require that ground rent owners register with the state, but not to take their property without compensation if they fail to do so.

Here's reporter Andrea Siegel's story about the ruling. Here's columnist Jay Hancock's take, that the decision was the right one. And here's the ruling itself, both the majority decision and the dissent.

Ground rent is a Colonial throwback. If you buy a home with a ground rent on the property, you must pay rent for the ground -- usually twice a year, and generally fairly small amounts. A series of Baltimore Sun articles about people losing their homes over unpaid ground rent prompted the General Assembly to pass several laws intending to reform the system, one of which was the registration statute.

The court's decision makes some people very happy and aggravates others.

On one side are ground rent owners who didn't register in time, some who say they had no idea the law existed and just wanted a second chance. (Ground rent owners don't all live in Maryland, and a variety of them don't own much. I heard from some elderly folks with one or two.)

On the other side are homeowners who thought they were free of ground rent, some of whom went the extra step of requesting a "certificate of extinguishment" and paying a fee to file it in the land records.

UPDATE: Robert E. Young, director of the state Department of Assessments and Taxation, says the ground-rent registry should reopen tomorrow -- Thursday 10/27. Meanwhile, homeowners who applied for a certificate of extinguishment will be receiving a letter from the agency informing them of the court's decision and what it means.

"It means ... that certificate of extinguishment is not valid," Young said.

Continue reading "Court: Extinguishment of ground rents is unconstitutional" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (10)
Categories: Ground rent
        

June 23, 2011

A little help for ground-rent owners

Earlier I laid out the steps for homeowners to get the ground rent on their land officially extinguished if the ground-rent holder didn't register it by the deadline last fall. Now here's a flip side of sorts -- assistance for mom-and-pop ground-rent owners who aren't getting paid what they're due.

The help comes courtesy of Louis Wilen, a part-owner of a small number of ground rents who figured the many small-time and elderly owners of such leases aren't having an easy time deciphering the new-ish collection rules. He's sharing examples of a ground-rent invoice and an overdue notice (a heads up that a lien will be forthcoming if the rent money is not).

"The big guys who own hundreds of ground rents already know how to collect -- and the tactics that they used (as reported by the Baltimore Sun) spurred the legislature into changing the ground rent laws in 2007," he wrote me in an email. "Unfortunately, the new laws made collection much more difficult for the small guys. Hopefully, making these sample documents available will help out the little guys."

He added: "Also, anyone who uses the lien warning notice should carefully read the law (which I included with the lien warning notice) and be sure to follow the required notification procedures, which include sending the notice by certified mail, then posting it if the certified mail is not deliverable, notifying lenders (if any), etc., etc. Determining the name and address of lenders requires a title search. The process isn't terribly difficult but it isn't simple, either."

On a semi-related note: The state's highest court is mulling over a challenge to the '07 registration law, which specified that all ground rents not registered with the state before Sept. 30 of last year would cease to exist. Sun columnist Jay Hancock wrote recently that people with a small number of ground rents -- one, in some cases -- got caught by this rule because they didn't know about it.

"Maryland could have given ground rent owners plenty of incentive to register without confiscating their assets," he wrote. "Don't let landlords collect rent until they sign up, for example. Don't let them sue tenants. Don't allow ownership transfers."

Would those penalties for non-registration be better than what's in place now?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (7)
Categories: Ground rent
        

May 2, 2011

John Mitnick: Ground rent Q&A

John%20Mitnick.jpg

 

 

Ground rent, that aged Baltimore institution, has been confusing residents for many years. It hasn't gotten any simpler with the raft of new ground-rent rules in 2007.

Real estate attorney John H. Mitnick agreed to tackle some common reader questions in this week's guest post.

He's with the Baltimore law firm of Mitnick & Mitnick, which was founded by his great-grandfather in 1881 and today includes his son, the fifth generation of the family to attend the University of Maryland School of Law. The firm specializes in real estate law.

 

 

 

Take it away, John:

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Q: The ground rent on my property wasn't registered by the owner before the deadline last year. Do I need to officially request an extinguishment certificate from the state? Is there any downside to not doing so?

A: I recommend officially requesting an extinguishment certificate. This should then be recorded in the land records of the jurisdiction in which the property is located. The result is that a future title searcher will be able to report that the property is in fee simple. Absent such recordation, the title searcher would report the leasehold interest as shown by the records, which could cause problems if the property is to be sold or refinanced.

Q: If the ground rent on my property wasn't registered, does that mean I don't need to pay? Or should I anyway, just in case the registration law is overturned by the Court of Appeals?

Continue reading "John Mitnick: Ground rent Q&A" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (15)
Categories: Expert guest post, Ground rent, Guest post
        

February 18, 2011

Md.'s highest court to hear ground-rent registry challenge

Maryland's highest court will consider a challenge to the state law that wipes out ground rents not registered before a September deadline.

Charles J. Muskin, trustee for a family estate that includes ground rents, sued last year, arguing that the law amounted to an unconstitutional taking of property.

A Baltimore judge ruled in favor of the state, saying the registration rule didn't "retroactively create or eliminate property rights, but instead, prospectively conditions the continued ownership of ground rents on compliance with the requirement of registration." Now the state Court of Appeals will review the case.

Continue reading "Md.'s highest court to hear ground-rent registry challenge" »

Posted by Jamie Smith Hopkins at 10:25 AM | | Comments (4)
Categories: Ground rent
        

February 3, 2011

Baltimore residents begin 'extinguishing' ground rents on their land

Colleague Meredith Cohn, reporter and Picture of Health blogger, had a personal interest in the outcome of the mass registration required of Maryland ground rents -- one of them, specifically.

I'll let her tell her story:

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Like so many people in Baltimore, when I bought a rowhouse I learned it came with a ground rent. It was a $60-a-year payment that I always feared wouldn’t get paid by my mortgage company. And even though the holder, a local real estate agent, could no longer take my house because of changes made by the General Assembly (following a Sun investigation), I still fretted about red tape and legal fees.

My husband and I contemplated buying it, but decided it wasn’t a good financial deal. So when a Sun entry on this blog reminded me that there was a ground rent registry and the deadline for holders to list their properties passed, I checked the tax assessor’s site for my address. To my utter surprise, there was nothing.

I figured my ground rent was created about a decade ago when the Realtor, then the rowhouse owner, renovated my house. I don’t know why he’d let it lapse. But I didn’t officially need a reason. I wrote to the state asking that the ground rent be extinguished -- based on instructions I found on this blog. A certificate came in the mail about two weeks later. Wednesday, I took it to the land records office in the courthouse and asked that it be attached to my deed. The clerk said he’d return the certificate by mail.

He said a number of people had been to the courthouse before me with their letters and their $40 (cash, FYI). All were happy to pay this one last time. And while I still am nowhere close to paying off my house, I feel a little more like I own my property.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (6)
Categories: Ground rent
        

January 18, 2011

A ground rent 'oops'

A bunch of Maryland ground-rent owners were shocked when they discovered, too late, that they had to register their property by Sept. 29 of last year or it would cease to exist. One of those owners got a second surprise when he noticed that the state declared in its tax booklet -- incorrectly, as it happens -- that the deadline was September of this year.

Colleague Andrea Siegel reports on that oopsie here, which some ground-rent advocates say is adding to confusion about the law.

Just after the actual deadline passed, I heard from about half a dozen people who say they didn't know and don't see why the state thought its occasional public notices were sufficient.

There were lots of news stories in 2007 when the General Assembly was changing ground-rent laws, one of which was about registration. But the three-year window to apply meant it fell off the radar until the very end. Some of the folks I talked to remembered the '07 hoopla but didn't catch on to the fact that the changes had implications for all ground-rent owners, not just the big investors whose aggressive tactics prompted a Baltimore Sun investigation.

One man didn't have the heart to tell his elderly mother that the bills she was carefully sending out had no legal standing anymore. 

The idea of registration is to make it absolutely clear who owns each ground rent and how to contact them, something that title companies say has proved difficult in the past. So it seems like a useful idea, but it also seems a shame that some folks were in the dark. One suggested a do-over period. What do you think?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (9)
Categories: Ground rent
        

January 12, 2011

What to do about an extinguished ground rent

Sept. 29 was a key day for owners and payers of ground rent, that unusual Baltimore system that separates ownership of homes from the land below them. If the ground-rent investors registered by that date, they get to keep collecting their twice-yearly fees. If they didn't, then the homeowners no longer have to pay -- because the ground rent officially ceased to exist.

But it's taken time for the state to process the thousands of last-minute registrations. That's left some homeowners in a state of suspense, wondering whether they still owe ground rent. If you check a residential property on the state's lookup site with a registered and processed ground rent, you'll see a link to "ground rent registration" near the top right corner. No link, on the other hand, could either mean there's no ground rent or it's still being processed.

There's not a lot in that last group, as it happens. The state Department of Assessments and Taxation said last week that it's going back and forth with ground-rent owners on about 45 applications, trying to correct what it believes are inaccuracies in the information provided. Once that's done, it'll post a message to that effect so homeowners know.

But Robert Young, acting deputy director of the agency, said homeowners don't have to wait any longer to get the ball rolling on the next step -- requesting a "letter of extinguishment" to make it official.

Continue reading "What to do about an extinguished ground rent" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (17)
Categories: Ground rent
        

November 1, 2010

Ground rent tally: about 85,000

It's looking like Maryland has about 85,000 ground rents.

The state Department of Assessments and Taxation is still processing all the last-minute registrations, but it's closing in to the point that it can offer that approximate figure. (It had 70,000 processed the day of the deadline.)

Some registrations have missing information or errors, and the state will send letters to the owners giving them 30 days to respond with corrections. It's projecting that the work will be completely done by Dec. 21.

When the assessors announce that they're all done, you'll know for certain if a property has ground rent -- meaning that the land is owned separately from the house on it -- by looking the address up on the state's property lookup site. See if there's a link to "ground rent registration" near the top right corner.

Three years ago, the state estimated that there were about 115,000 ground rents in existence. Does that mean 30,000 went "poof" on Sept. 30 because their owners forgot or didn't realize they had to register? Well, no, since some of the residents renting the land beneath their homes eliminated their ground rent by buying it out.

But other ground rents did disappear.

Continue reading "Ground rent tally: about 85,000" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (4)
Categories: Ground rent
        

September 30, 2010

Ground-rent registration rush

The state's estimate of ground rents: about 115,000.

The number of ground-rent registrations processed as of Wednesday morning: about 70,000.

Ground rents still to be processed because they were brought in or mailed right before the deadline: No one knows how many yet -- but the assessment office was so flooded by last-minute applicants that it had to reassign some staffers to help out.

Any ground rents that weren't in assessors' hands or postmarked by Wednesday officially cease to exist, and the owners can no longer collect. (A lawsuit is challenging that rule, so the future of unregistered ground rents could change.)

Some ground rents, of course, have ceased to exist since the state's 2007 estimate for another reason -- the owner of the home bought it in order to also own the land.

Wondering if there's ground rent on a particular property? It could take several months for all the applications to be processed, but as they are, the state is linking the applications to the property look-up page. Type in the address you're interested in and see if there's a "ground rent registration" link near the top right corner.

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (0)
Categories: Ground rent
        

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
        
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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.
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