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Ground rent suit is filed

A trustee for a ground rent owner has filed a lawsuit challenging the constitutionality of new laws intended to reform a system that had cost hundreds of people their homes.

In the suit filed in Anne Arundel County Circuit Court, Charles Muskin seeks a temporary restraining order and preliminary injunction to block measures that end ejectment - the seizure of a property for nonpayment of ground rents - and require a registry of ground rents.The laws, which would take effect July 1, were part of a reform package enacted in the last session of the General Assembly in the wake of an investigative series published byThe Sun. The articles reported that ground rent holders had sued to get possession of homes nearly 4,000 times over six years - sometimes over unpaid sums of as little as $24. Baltimore judges awarded houses to ground rent holders at least 521 times between 2000 and the end of March 2006.

In many cases, ground rent holders used their power under state law to oust homeowners, then sold the properties, sometimes for tens of thousands of dollars in profit. Some homeowners were able to reach settlements to regain their houses by paying legal and other fees many times the amount of ground rent owed.

In addition to stopping ejectments and creating the registry, the package of reform laws also banned the creation of new ground rents and made it easier for homeowners to redeem - buy out - ground rents.

Muskin, a trustee for two trusts from his grandfather's estate that include about 300 ground rents in Baltimore City and Anne Arundel County, testified against some of the bills before the General Assembly last session.

"The laws take away property rights of the trust," Muskin said. "It's not right."

Muskin, who said the trusts bring in less than $10,000 a year, said he saw no reason to wait until the laws had taken effect to challenge them. An attorney, he filed the suit Wednesday on his own.

"The court should make a determination as soon as possible, so everyone knows whether the laws are constitutional or not," he said.

Rick Abbruzzese, spokesman for Gov. Martin O'Malley, said yesterday the state will stand by the new laws.

"We will defend, and we are confident the court will uphold this important legislation," he said. O'Malley supported the reform package and signed it into law.

Raquel Guillory, a spokeswoman for the attorney general's office, said the suit had been received and was being reviewed, but declined further comment.

Brian E. Frosh, chairman of the Senate Judicial Proceedings Committee, which considered the bills, said lawmakers "got advice from the attorney general that the legislation was constitutional, particularly with respect to the claims made" in the suit.

The laws changed "not a property right, but a remedy," said Frosh, a Montgomery County Democrat. "It used to be you could toss somebody out of their house for a $20 payment. Now you can get the 20 bucks, but you have to follow a different procedure."

Under the new laws, if all else fails and a house is sold, Frosh said, the ground rent holder collects only what he is owed, and the homeowner gets the balance.

R. Marc Goldberg, an attorney and ground rent owner who represents about two dozen ground rent owners, said he expected some of the new laws to be challenged. "I'm not surprised," he said yesterday. "Those are the two most troubling parts of the new laws."

Muskin's lawsuit specifically challenges the law that ends ejectment as an option for failing to pay ground rent and instead requires that ground rent owners pursue a lien as a remedy to recoup money. It also challenges the law requiring ground rent owners to register all their ground rents with the Department of Assessments and Taxation and to pay a fee. Ownership of the ground rent is terminated if the owner fails to comply.

"The Trusts desire the right to bring ejectment actions with regard to those properties," the lawsuit says. "If the Trusts (and others in a similar situation) are unable to file an ejectment action, the Trusts will be precluded from recovering the backdue ground rent that accumulates during the period of this litigation. That loss is substantial and irreparable."

In his lawsuit, Muskin alleges that the trusts have several ground rents that are more than two years behind, and several that are more than three years in arrears.

Muskin also contends that registry fees are excessive. The Department of Legislative Services estimated that the registry would bring in $2.5 million in the first four years while costing just $300,000, according to the suit.

"I fully expect to prevail," Muskin said. "To me, it's pretty clear-cut."

june.arney@baltsun.com

Sun reporter M. William Salganik contributed to this article.

Copyright © 2015, The Baltimore Sun
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