For centuries, many homeowners and condo owners in the City of Baltimore have paid ground rents twice a year, with the price generally between $24 and $150 a year. This year, it’s possible for as many of 30,000 homeowners to get rid of the ground rent for good.
It’s not hard. If your home is eligible, all you need is patience, comfortable shoes and $40 cold cash.
First, a little background, and then a step-by-step guide to getting rid of your ground rent obligation—if your ground lease holder failed to register it by the deadline.
Four years ago, the Baltimore Sun published a spectacular public-service series about unscrupulous ground rent holders who piled thousands of dollars in penalties on homeowners who did not pay their ground rent promptly. In many cases, the homeowners did not know the rent was due. State law, back in 2006, held the homeowner responsible for finding the ground rent owner and paying the rent due.
As property values swelled during the real-estate boom of the mid-90s to mid-00s, ground rent owners became more aggressive about filing suits to recover rents past due. There was no lawful limit on the penalties that ground rent owners could charge errant homeowners, and many piled the penalties high.
In some cases, the ground rent holders seized the house and property and either rented it back to the homeowners or evicted them entirely, then sold the property for tens of times the ground rent due.
The Maryland General Assembly went into session a couple of weeks after the Sun published its series and passed a number of reform bills. The centerpiece of the reform bills was a requirement for ground rent owners to register their holdings with the state, which would then post the information on the Maryland Department of Assessments and Taxation website.
Homeowners could click on the ground rent registry, find the owner and the owner’s address, and pay the bill.
Here’s the part that set ground rent owners howling: if they failed to register their ground rent holdings with the state by Sept. 30, 2010, the ground rent ceased to exist and the homeowners were free of the obligation.
SDAT estimates that roughly 30,000 ground leases were not registered by the end of last September.
The Maryland Court of Appeals has agreed to hear a challenge to the law, but the challenge has already failed in Baltimore Circuit Court.
In the meantime, if the State Department of Assessments and Taxation does not list a ground rent for your home, and if you have been paying ground rent, you might as well get out from under it. Here’s how.
Step 1: Go to the SDAT website, sdat.state.md.us. Click on “Real Property Data Search.” From the pull-down menu, select “Baltimore City” and then click on “Street Address.” When the Enter Premises Address window opens, enter your home address. Press “return” or click “Search.”
Another window will come up. If a ground rent is registered for your property, the upper right side of the window will look like this:
If not, it will look like this, and congratulations! You may begin the Ground Rent Extinguishment process:
Step 2. Write to the State Department of Assessments and Taxation
Attention: Ground Rent
301 W. Preston St., Room 801
Baltimore, MD 21201
to ask for a Certificate of Extinguishment for your address. Write clearly, and specify an address to which SDAT can send the certificate. This step is free—except for the price of the stamp and stationery. There is no way to apply for a Certificate of Extinguishment online.
Within a month—and usually within a couple of weeks—you will receive a blue-bordered certificate in the mail. It looks official, but it is not until you get it stamped a couple of times. You are ready for:
Step 3. Take the certificate to the Abel Wolman Municipal Building, 200 N. Holliday St., next to City Hall. Go to Room 1, the Tax Recordation room. Get your certificate stamped. This certifies that there is no transfer tax due. This step is free.
Step 4. Take your stamped certificate and the receipt from the to the Clarence Mitchell Courthouse, 100 N. Calvert St. The Mitchell Courthouse is on the west side of Calvert Street and a few more steps away from the municipal building. Be prepared to go through the metal detector, and have your $40 cash handy. Do not go to Courthouse East, as many people do by accident.
Once you have found the Mitchell Courthouse, go to Room 610, the Land Records office. Take a number and wait for a few minutes.
When you get to a window, give the clerk the $40 and your stamped certificate. Several minutes later, and after a short visit to another office across the room to get the state’s property recordation numbers for your property—for some reason they are different from the city’s—you will get another stamp on your certificate, and the ground rent extinguishment will be official and recorded. Uncork the champagne! You no longer owe ground rent, unless the Court of Appeals overturns the law, which is not all that likely.
Note: If you do not know whether you have been paying ground rent—many people have their ground rents paid from escrow accounts by their mortgage company—check your deed. If the deed says “Fee Simple” you already own the ground beneath your house and there is no need to go through the extinguishment process.
Depending on where you park, you will cover a little less or a little more than a half mile, providing a little physical exercise while you exercise your rights as a citizen.
If you do have a ground rent, you can redeem it in certain cases for a fee that depends on the annual rent and when the lease was created, but is generally less than $3,000. The state Department of Housing and Community Development even has a loan program for just that purpose. Check the details at livebaltimore.com/resources/groundrent.
by Jacqueline Watts