The Maryland Senate passed a ground rent bill yesterday that would require the owners of ground rents to register them before they would be allowed to collect the money from them.

This was in response to the ground rent registration law that was overturned last year, where if the ground rent were not registered by a certain date, the rent would be extinguished. Ground rent owners who had not been aware of the registration fought and won that battle, where a court found that to be unconstitutional.

A seemingly reasonable compromise is this law, which doesn’t extinguish any ground rents, that says rent cannot be collected until the ground rent is registered. Once registered, the ground rent owner has the right to collect three years’ back rent, but it cannot make claims other than that if the property were not registered before.

The Baltimore Sun reported on this bill once it was passed, and says a similar bill is in the House of Delegates, which the government is hoping helps to solve some of the ground rent issues at hand.

The issue it doesn’t resolve is when someone wants to change the property from ground rent to fee simple, and the ground rent owner cannot be identified. The one thing that the law that was overturned would have done is make those ground rents that haven’t been paid in years because no one can find the rightful owner go away. They are a big problem for many out of state mortgage companies, and therefore the title companies who are doing the research and witholdings.

There are not many mortgage companies from out of state understand leasehold properties or the history of ground rent in Baltimore, and ground rents do affect a home’s value, whether or not there is a mortgage. Two years ago, FHA changed the way that ground rent properties are appraised, so there is that part of ground rent confusion and concern as well.

The main thing for a homeowner with ground rent to know is that even if you don’t “own the ground,” like many properties in Rodgers Forge, Loch Raven Village, and Downtown Baltimore, you can still use it any way that you want or desire (according to the covenants and restrictions of the neighborhood,) as long as you pay your ground rent.

Luckily this bill, if passed by the House of Delegates, can help to ensure that only three years’ back rent can be collected, and only if the property is registered, so it doesn’t leave homeowners in a bad position if they did not know who the owner was, and therefore had not made prior payments.

For more information on Baltimore ground rent homes and how ground rent can affect you as a homeowner, contact me. I would be happy to help!