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What is ground rent?

 

Ground Rents originated in Colonial America, to allow the colonists to own homes without paying for the land on which they lived. Ground Rents still exist in Maryland and various other areas around the nation.

In Maryland, the typical Ground Rent is a 99-year lease with an automatic renewal provision. With a Ground Rent, you pay the Ground Rent owner an annual amount (typically in semi-annual payments) to remain on the property. So long as the payments are made, the owner of the Ground Rent cannot remove you from the property. Hence, an individual may own the home in which he/she lives, but lease the property on which the home sits.

Ground Rents created after April 8, 1884 may be redeemed or purchased from the Ground Rent owner (some Ground Rents created prior to April 9, 1884 may not be redeemable, depending upon the amount of units on the property and if the owner files a motion to preserve the irredemability in the appropriate land records by 12/3/2010),  by paying an amount equal to the annual Ground Rent divided by:

 

1. 4%, if the ground lease was executed from April 8, 1884 to April 5, 1888, inclusive;

 

2.    12%, if the ground lease was or is created after July 1, 1982; or

 

3.      6%, if the ground lease was created at any other time.

Thus, to redeem a $90.00 annual Ground Rent which was established in 1960, you would pay the Ground Rent owner $1,500.00 ($90.00 x 6%), plus the cost of the reversionary search, recording and document preparation fees.

 

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Phone: 410.828.4800 • FAX: 410.828.4801

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