What is "Ground Rent?"Ground Rent is very popular in the Baltimore Area. Basically, the homeowner is responsible for payment of a small sum of money each year to the owner of the ground rent. Owners of ground rents can be private individuals, companies or banks.
Does the ground rent owner actually own my ground?No. The ground rent owner only owns the right to collect the ground rent. They may not come on the property. The owner of the house is responsible for maintaining the ground. (snow removal, lawn cutting etc.)
How much ground rent do I have to pay?The annual amount is stated in the original ground rent lease. Usually, yearly amounts range anywhere from $15.00 to $240.00. Payments are usually paid twice a year on the dates specified in the ground rent lease for one half of the yearly amount. Most of the time, your mortgage company would pay the ground rent from escrow, similarly to the method of payment of taxes.
Can I buy (redeem) my ground rent?Yes, normally ground rents for 99 year leases renewable forever are redeemable. The owner of the house has an automatic right to insist on purchasing the ground. NOTE: certain ground rents created before 1888 may not qualify for automatic redemption.
How much does it cost to redeem the ground rent?The amount to redeem your ground rent is based on the original ground rent lease and the laws of the State of Maryland. If the original ground rent lease states a redemption price, then the price is as stated. Otherwise, the Annotated Code of Maryland fixes the price as a capitalization rate. The capitalization rates are based on the date of the original ground rent lease and are as follows:
July 1, 1982 - Present - 12%
April 6, 1888 - June 30, 1982 - 6%
April 8, 1884 - April 5, 1988 - 4%
Prior to April 9, 1884 - Negotiable and possibly non-redeemable.
To compute the redemption price, simply take the annual ground rent and divide by the capitalization rate. For example: Suppose the annual ground rent is $120.00 and created by a lease dated February 15, 1956. Using the above capitalization rate, $120.00/.06 = $2,000.00
Can the ground rent owner raise the price?No, both the annual rent and redemption price are fixed by the terms of the lease.
What happens if I do not pay the ground rent?This would be bad. The ground rent owner does, after notice and a lawsuit, have the right to sell your house through legal proceeding to enforce the collection of the ground rent.
How do I find my ground rent owner?The easist way is to check the SDAT registration.
Step 1) Start at the SDAT website. Select your County and click “Street Address”. Then enter the number and street name. Be careful not to enter the street name suffix (Road, Street, Avenue, etc.) Click on the Search button.
Step 2) Locate your ground rent owner by looking for the link at the top right corner of your property page entitled "Ground Rent Registration"