What is Ground Rent?
Nearly unique to the Greater-Baltimore area, ground rent is a periodic monetary payment to a ground leaseholder who holds a reversionary interest in the property or ground underneath a home. Specific terms and conditions are contingent on the actual language of the ground lease, but such leases often require payment from the lessee (homeowner) of between $50-150 per year, commonly paid in semi-annual installments. In practical effect, a homeowner who is subject to a ground rent must make payment to a ground leaseholder for the right to dwell on the property. Full and timely payment to the leaseholder ensures this right perpetually, or until the lease expires and is not renewed. In common practice, the homeowner is singularly responsible for maintenance of the land and improvements thereon, including those made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953)). Similarly, it is the sole responsibility of the homeowner to procure and make payment on any utilities that service
Ground Rents originated in Colonial America, to allow the colonists to own homes without paying for the land on which they lived. With a Ground Rent, you pay the Ground Rent owner an annual amount (typically in semi-annual payments) to remain on the property. Pre-existing violations of subdivision laws, zoning ordinances or CC&R’s (Covenants, Conditions & Restrictions) So long as the annual 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), by paying an amount equal to the annual Ground Rent multiplied by: 1. at 25 (which is a capitalization at 4%), if the ground lease was executed from April 8, 1884 to April 5, 1888, inclusive; 2. 8.33 (which is a capitalization at 12%), if the
In Maryland, a ground rent is established on a lot and all of the improvements on it for a lease of 99 years. The rent is usually payable semi-annually with the lease renewable forever. The most important thing to know when you buy a house subject to a ground rent is that you are not buying the property in fee simple, which is the most absolute and unconditional form of private property ownership.
