What is a Ground Rent?
 

Irredeemable ground rent known as perpetual leases, have been barred by statutory law in the State of Maryland since April 8, 1884. The following information applies only to the long term leases created since that date.

In the State of Maryland what are commonly known as "Ground Rents" are nothing more then long term leases, renewable forever at the option of the tenant. These long term leases guarantee the owner of the ground rent at lease three (3) years of rents, but at any time after that, the tenant can give the ground rent owner 30 days notice that he/she wants to purchase the ground rent and then proceed to do so. The rights of the owner (Lessor) and tenant extend to their heirs and assigns.

As long as the tenant pays the stipulated payments and meets the other obligations imposed by the lease, he/she may enjoy practically all the benefits and privileges of full ownership except that he/she may be enjoined from moving or demolishing any house or other improvements on the land or committing any other act which would destroy the security of the owner’s (Lessor’s) interest in the property.

Many owners of the leasehold interest in property continue in their erroneous belief that they own their house but do not own the ground on which the house stands, while as a strictly technical matter, they do not actually own either the house or the land in fee simple but tenants with the firmly established right to acquire fee simple title by giving the notice and paying the owner (Lessor) the amount provided for in the
GENERAL RULES

Time of Redemption:
If the lease is executed on or after July 1, 1971, the reversion is redeemable at the expiration of three years from the date of the lease. If the lease is executed between July 1, 1969 and July 1, 1971, the reversion is redeemable at the expiration of five years from the date of the lease. If the lease is executed before July 1, 1969, the reversion is redeemable at any time.

Redemption of revisions in leases for longer than 15 years - except for apartment and cooperative leases, any reversion reserved in a lease for longer than 15 years is redeemable, at the option of the tenant, after a notice of one month to the landlord, for a sum equal to the capitalization of the rent reserved at a rate not exceeding 6 percent per year. If a lease was executed between April 8, 1884 and April 5, 1888, the redemption price may be some other amount specified in the lease not exceeding 4 percent capitalization of the reversion.

Applicability of federal regulatory changes - notwithstanding the above statements, any regulatory changes made by a federal agency, instrumentality, or subsidiary, including the Department of Housing and Urban Development, the Federal Housing Administration, the Government National Mortgage Association, and the Veterans’ Administration, shall be applicable to redemption of reversions of leases for longer than 15 years. ( 1982, ch 317; 1983, ch 626)

This information does not apply to leases of property leased for business, commercial, manufacturing, mercantile, or industrial purposes or any other purpose which is not primarily residential, where the term of the lease, including all renewals provided for, does not exceed 99 years.