A Man's Home Is His Castle - Until The Ground Rent's Overdue

MayorBob.

Posted to Legal on Sun Dec 24, 2006 at 12:50:39 PM EST (promoted by port1080). RSS.

The home you own is likely the largest purchase and possibly the biggest investment you'll ever make in your life.  And, as long as you keep steady with the mortgage and keep up your property values, you can expect to have a tidy sum built up in equity over time - on that you can depend.  You can, unless you happen to own anyone of around 120,000 houses in Baltimore, Maryland, that is.  Because, those homes come with an added feature, sometimes a feature of which the homeowner is completely unaware - the ground rent.  And, as many Baltimore homeowners are finding out to their chagrin, if they get behind in the ground rent they can be tossed out onto the street.

Ground rents in Baltimore are vestiges of colonial law, dating back to the 1600s when the King of England gave Caecilius Calvert (Lord Baltimore) all the land in the colony of Maryland.  Calvert began charging colonists rent for the right to build homes and businesses on the land.  Gradually, ground rents outside of Baltimore lapsed into nonuse as holders failed to exercise their right to renew their leases.  Such was not the case in Baltimore where, to this day, a ground rent holder can renew his rights for 99 years at a shot for perpetuity.  Ground rents began to be bought and sold to new holders and were passed on as part of estates.  Meanwhile, property owners are required to pay annual ground rents of from (US)$24 to $240 to whomever the ground rent holder of record is.  Property can be bought and sold and is conveyed by deed, but the ground rent is still due to the holder by the new owner of the property.

Ground rents can be found outside of Baltimore - Pennsylvania has some communities with a number of them and many commercial properties in Hawaii generally have ground rents associated with them.  But, nowhere else is there such a concentration of ground rents as there are in Baltimore.  And, nowhere else have the practices of aggressive ground rent holders taken such a nasty turn as in Charm City.  Because Baltimore is gentrifying and property values have been on the rise since the 1990s, some holders of ground rents have found a relatively easy way to make money - sue the property owner who lives on property with a ground rent.  As long as a ground rent is overdue, a holder can take the property owner to court and sue them - according to court records this has happened 4,000 times in the last six years.  The court will quickly determine the ground rent is due and award judgment to the holders - and tag on sometimes as much as 100 times the amount of the ground rent due in the form of legal fees.  If a property owner can't pay that judgment, the home owner ends up being forced out of their home in an ejectment, and the property belongs to the ground rent holder for him or her to do with as they please - that's happened over 500 times in the last six years.  The problem with paying ground rents is that this obligation isn't necessarily made known to property owners when they take possession of their property.  In most instances, ground rents are identified somewhere in the bowels of a deed, often in terms confusing to home buyers, and rarely are the current ground rent holders identified.  In most instances, home buyers cannot rely upon title searchs to know if there is a ground rent on the property or not.

Who are these ground rent holders?  In many instances they are banks, churches, and charities which normally don't file suit for overdue ground rent.  There are, however, others involved in the ground rent business who view collection of ground rent as their right.  According to R. Marc Goldberg, a Baltimore attorney specializing in collection of ground rents he doesn't do this to be "mean and nasty" but he contends "business is business" and essentially says he'd be a fool to "deny an economic incentive to make a windfall profit."  Maryland Attorney General J. Joseph Curran said he was appalled at some of the stories, observing that it might be time to phase out the entire concept of ground rents.  According to Curran, "an older couple or a widow could forget this, and for someone to come and take their house, when it's worth so much more than they paid for it, is an outrage."