Ground Rent in Maryland-thing of the past? What about the investor?
Posted Mar 23, 2007 @ 3:30 pm, Viewed by 582 Visitors, Read 587 Times.Did you see the headlines of todays Baltimore Sun ? Governor Martin O'Malley has signed his first piece of legislation since taking office in January. Ground Leases as we know know them may be a thing of the past.....finally!
I personally believe that this is long overdue in the State, even though I am sure that a lot of investors would think otherwise. As a Realtor, and a transplanted Hoosier, Ground rent was foreign to me when I moved to Baltimore County. Although I soon found that it was a household phrase here.
Ground leases have been around in Baltimore for centuries and I believe have been fought against about the same amount of time. Several Baltimore residents have been evicted from their home due to unpaid ground rent-some as little as $30! This is a very arcane system and I, for one, am glad to see that someone is finally getting something done about it.
The Maryland State Legislature is currently writing new legislation that could remove all ground leases within a decade. I am of the belief that new legislation would force the redemption of current ground rent with the transfer of property. They could also add to the bill that ground rent must be redeemed with any refinance of the property.
I applaud the legislature for stepping up to the plate on this. I would like to hear something from investors that own several properties and collect ground rent. How is this going to affect your business? Will this help or hurt the overall economy of the State? I would enjoy your opinions.
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Social Bookmarking4 Responses to “Ground Rent in Maryland-thing of the past? What about the investor?”
sdluck
Although I did not state it-I was speaking specifically of Residential Ground Lease. I would agree to some point that Commercial is a whole different ball game and should be viewed and handled separately.
Ronald Nuofer
What if someone gets hurt on your property and you are paying a ground rent? Or If work needs to be done, say to restore a crumbling sidewalk, on the "rented" property? Who is responsible?
sdluck
Ronald-sorry about taking so long to respond-the last few weeks have been both a blessing and a nightmare. The homeowner is responsible for ALL liability arising on the property. They must also maintain any improvements to said property-i.e. sidewalks
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I agree with you, for the most part, but that's based on the way it was put specifically in your article. For residential properties, including single-family homes condos and coops, I think ground leasing is ultimately a loser--old ground leases have huge gaps because they don't anticipate a lot of situations that have come up over the years, and modern-day ground leases with their complicated provisions are just too high-powered for the average non-lawyer. I would not recommend ground-leased anything for the average home buyer. However, there is one exception to this in the residential world--community land trusts use ground leases to provide affordability to low income tenants/homeowners and so there is no intent to maximize profit. As for commercial real estate, I have to disagree with you about ground leases--they are a powerful tool for financing institutional-size deals and sometimes there really is no available substitute in certain complicated situations.