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Understanding Ground Rent In Maryland
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- 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 understand if a residential or commercial property undergoes ground lease? What if I can not call the ground lease holder? What takes place if I fail to pay ground rent? What does it suggest to redeem ground lease? How much does it cost to redeem ground rent?
What is Ground Rent?
In certain scenarios, a property owner owns your house they reside in however not the land the house sits on. Another person (the ground lease holder) owns the land and leases the land to the house owner. Under Maryland law, a ground lease holder is entitled to rent payments from the owner of the home that lies on their land. These payments are understood as ground lease.
Ground lease is most typical in the Greater-Baltimore realty market but exists throughout Maryland. Ground rent payments typically range from $50 to $150 each year and are usually paid semi-annually (twice a year). The language of the ground lease will set out the terms and conditions of payment. A ground rent lease is typically for 99 years and restores indefinitely.
Ground rent deals are different from normal proprietor and occupant relationships. This is because the ground lease owner has no right to take back any residential or commercial property unless the tenant does not pay rent. That is, the ground lease holder does not have a reversionary right to the residential or commercial property or any structures developed on it unless the homeowner stops working to make the required payments. If the leaseholder is current with their ground rent payments, the residential or commercial property remains under their control.
The house owner is accountable for upkeep of the land and any enhancements on the land, including enhancements made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The homeowner has the authority to change, renovate, and reconstruct the residential or commercial property as they wish, however they should ensure that their actions maintain the worth of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole responsibility of the property owner to procure and pay on any utilities that service the residential or commercial property.
How do I know if a residential or commercial property undergoes ground lease?
When a residential or commercial property is noted for sale, the residential or commercial property description should list whether the residential or commercial property has any applicable ground rent. If the residential or commercial property is noted as "Fee Simple," the listing includes both the house and the residential or commercial property (ground) in the purchase cost - there is no ground rent. If there is an indicator of "Ground Rent" in a listing, it indicates that a charge needs to 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 buy a home, you can figure out if a residential or commercial property is subject to payment of a ground lease by looking at the deed. Ground lease deeds are submitted in the land records of the Circuit Court in the county where the residential or commercial property is situated. Oftentimes, a deed for numerous ground leas owned by one owner will be composed. Land records can be found on the website mdlandrec.net.
Maryland law needs that ground lease holders register ground rent leases on the Maryland State Department of Assessments and Taxation's (SDAT) Ground Rent Registry. If you are not sure that your residential or commercial property has a ground lease, you can see the registration status through SDAT's Real Residential or commercial property Search. (When seeing the residential or commercial property record, click on "View Ground Rent Redemption")
If a ground lease is signed up for your residential or commercial property, you are obligated to pay the ground rent to the ground lease holder. You should contact the owner noted on the registration type concerning payment of the ground rent or to notify the owner that you would like to redeem your ground lease. It is likewise your responsibility to notify the ground lease holder if you change your address or transfer ownership of the residential or commercial property. If you are a ground lease tenant (house owner) or leaseholder and you have a question, it is a good idea to get in touch with a lawyer.
Read the law: Md. Code, Real Residential Or Commercial Property § 8-703