Key Takeaways
- Ground rent is a unique Maryland property arrangement where the land is leased rather than owned
- Property owners pay annual ground rent to the ground rent holder (ground landlord)
- Ground rent is typically \$50-\$200 per year but varies by property
- Ground rent can usually be redeemed (purchased) by the property owner
- Failure to pay ground rent can result in the ground landlord taking the property (ejectment)
Maryland Ground Rent System
Ground rent is a property arrangement unique to Maryland where the property owner owns the improvements (house) but leases the land from a separate owner called the ground landlord or ground rent holder.
How Ground Rent Works
Basic Structure
| Element | Description |
|---|---|
| Property Owner | Owns the house/improvements |
| Ground Landlord | Owns the underlying land |
| Ground Rent | Annual payment for use of land |
| Lease Term | Typically 99 years, renewable |
Origin
Ground rent originated in colonial Maryland as a way to:
- Allow development without large land purchases
- Provide ongoing income to landowners
- Make property more affordable for buyers
Ground Rent Amounts
| Typical Range | Frequency |
|---|---|
| $50 - $200 per year | Semi-annual or annual payments |
Calculating Ground Rent Value
Ground rent is often capitalized at a rate to determine redemption value:
- If ground rent = $100/year
- At 6% capitalization rate
- Redemption value = $100 / 0.06 = $1,666.67
Ground Rent vs. Fee Simple
| Feature | Ground Rent | Fee Simple |
|---|---|---|
| Land ownership | Leased | Owned |
| Annual payment | Required | None |
| Title type | Leasehold | Fee simple |
| Mortgage availability | Available with caveats | Standard |
| Property taxes | Owner pays | Owner pays |
Ground Rent Redemption
Property owners have the right to redeem (purchase) the ground rent in most cases.
Redemption Process
- Determine redemption amount (typically 12x annual rent, but check deed)
- Notify ground landlord of intent to redeem
- Pay redemption amount
- Record new deed showing fee simple ownership
Maryland Ground Rent Registry
Maryland maintains a Ground Rent Registry that:
- Tracks all ground rents in the state
- Helps identify ground landlords
- Provides notice of ground rent obligations
- Facilitates redemption process
When Redemption May Not Be Possible
Some older ground rent deeds may:
- Not include a redemption right
- Specify a different redemption formula
- Require landlord consent
Consequences of Non-Payment
Ejectment
If ground rent is not paid:
| Step | Action |
|---|---|
| 1 | Ground landlord gives notice of arrears |
| 2 | Property owner has time to pay |
| 3 | If unpaid, ground landlord can file for ejectment |
| 4 | Property owner can lose the property |
Critical: Ground rent non-payment can result in losing the entire property, not just the land. This is a serious consequence buyers must understand.
Licensee Responsibilities
Maryland licensees must:
- Disclose if a property is subject to ground rent
- Explain the buyer's obligations
- Provide ground rent details in contract
- Assist in identifying the ground landlord
- Recommend title search to confirm ground rent status
What is ground rent in Maryland?
What can happen if a property owner fails to pay ground rent in Maryland?
What does it mean to "redeem" ground rent in Maryland?