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Ground Rent in Maryland: What It Is & How Much It Costs

What is Ground Rent?

Ground leases and ground rent are unique aspects of buying real estate in Baltimore. If your home has a ground lease, you own the structure but not the land underneath. You’ll make rent payments to the landowner, typically a small, fixed semi-annual fee, and you can purchase the ground lease from its current owner at a state-controlled rate. Ground rent has played a significant role in Baltimore’s history and exists to make homebuying more affordable. Understanding ground rent is essential if you want to buy historical homes or rowhouses in Baltimore.

5 Things to Know About Ground Rent in Maryland

  • A ground lease allows you to own a building while leasing the land, typically for 99 years in Maryland.
  • Ground rent payments range from $50 to $150 annually, often in two installments.
  • Property owners must register ground rents with SDAT; unregistered rents cannot be collected.
  • Non-payment of ground rent can lead to legal actions, including liens and foreclosure.
  • Always verify ground rent status through property listings or the Maryland Ground Rent Registry to avoid complications.

What Is Ground Rent?

Ground rent is a unique real estate arrangement where a homeowner owns the structure of a property but leases the land beneath it from a ground rent holder. The tenant pays a semi-annual fee, typically $50 to $150, for the right to use the land. Ground rent leases are often long-term (99 years with automatic renewals), and most are “redeemable,” allowing the tenant to buy out the ground rent for a lump sum. The state controls ground lease redemption costs to protect affordability.

This system dates back to colonial times and was designed to reduce the costs of owning a home and land. Today, it’s relatively uncommon outside Maryland. Within Baltimore, it most commonly applies to rowhouses and CHAP-eligible properties. State laws now require ground rent holders to register with the Maryland Department of Assessments and Taxation (SDAT) and follow specific notice requirements before pursuing legal action for non-payment, including foreclosure.

Redeeming ground rent involves paying a set price (dividing the rate by the annual rent amount) to gain full land ownership. Many homeowners choose to do this to simplify ownership and avoid ongoing payments. While ground rent arrangements can reduce upfront home purchase costs, they create a financial obligation and potential foreclosure risk for non-payment.

How Do I Know If My Home Has Ground Rent?

To find out if a home your interested in by has ground rent, start by examining the property listing; if it shows a Fee Simple designation, you’re in the clear, and no ground rent applies.

Next, check the Maryland Department’s Ground Rent Registry, where all ground leases must be registered. You can verify your registration status through the SDAT’s Real Property Search.

If you suspect a ground lease exists, look for ground rent deeds filed in the Circuit Court land records. Additionally, if you find a ground lease, remember to notify ground leaseholders of any address changes or ownership transfers to ensure proper communication regarding payments.

How Much Does Ground Rent Cost Per Year?

Ground Rent is Typically $50 to $150 Annually

Many homeowners in Maryland pay ground rent that typically ranges from $50 to $150 per year, with most payments made semi-annually. The cost of your annual ground rent depends on the specific lease agreement you entered into, which can last for 99 years and is renewable indefinitely.

Staying on top of your ground rent payments is important, as unpaid ground rent can lead to serious consequences, including a property lien against your home.

How Do I Find Out Who The Ground Lease Holder Is?

To find the land owner’s contact information, check the Ground Rent Registry maintained by the Maryland Department of Assessments and Taxation (SDAT) online. The leaseholder must be registered here to be eligible for payments.

What Does It Mean to Redeem Ground Rent?

Redeeming ground rent means purchasing the land from the ground leaseholder, allowing you to gain full ownership of your home and the land it sits on. To initiate ground rent redemption, you must confirm that your ground rent is eligible for redemption, typically if it was created after April 8, 1884.

The redemption amount will be calculated based on Maryland law, using a capitalization rate adjusted for your lease’s execution date. You’ll need to notify the ground leaseholder of your intent to redeem and submit an application for redemption to the Maryland Department of Assessments and Taxation, along with the required fee. Be aware that legal fees and taxes may apply during this process.

What Happens If I Don’t Pay Ground Rent?

Failing to pay ground rent can lead to serious financial consequences, including substantial fees. Under Maryland law, ground leaseholders can take legal action, including filing for possession of their property if payments remain in default. They can also place a lien on your home, further complicating your financial situation.

Recent legislation limits the recovery of past-due ground rent to a maximum of three years prior to notice. Therefore, if the leaseholder fails to make contact with you, they’re only able to claim up to three years of back rent. If you find yourself in this predicament, seeking legal advice is crucial to effectively navigating the potential repercussions and understanding your rights and responsibilities as a homeowner in Maryland.

Do I Still Own My Home If I Have a Ground Lease?

Yes, you still own the home if you have a ground lease. Additionally, the leaseholder doesn’t have the same control over the property as in a traditional landlord/tenant relationship.

Ground Rent: What to Keep in Mind

Ground rent doesn’t have to be complicated. If you’re moving to Baltimore, always verify your property’s ground rent status and stay on top of annual payments to avoid potential penalties like liens or foreclosure. If you are responsible for ground rent, consider redeeming it for peace of mind. Being informed about your obligations and rights ensures you can manage your home effectively, even when leasing the land beneath it.

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