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Second ground rent reform measure declared unconstitutional

New law trampled property rights of ground rent holder, including use of ejectment, judge rules

By Andrea F. Siegel, The Baltimore Sun

7:47 PM EST, December 21, 2011

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A second ground rent reform law has been invalidated, with an Anne Arundel County judge ruling that the 2007 law dealing with collection of overdue rents is unconstitutional because it tramples ground rent holders' property rights.

The holding of ground rents is a property right protected by the state constitution, Judge Paul F. Harris Jr. said in his ruling filed Tuesday. Infringing on those rights made the new law invalid, he wrote, because the ground lease holders were not compensated for their financial losses.

The law had replaced ejectment — in which people lost their homes for failing to pay a pittance in ground rent — with a lien and foreclosure. Ground lease holders maintained that the process required under the new law made collection of delinquent rent cost more than the value of the rent payments — if they could get anything at all.

The current court challenge addresses collection of overdue payments. An earlier challenge was to the registration of ground rent; in October, the Court of Appeals found parts of the registry requirement unconstitutional.

The new ruling's immediate effect on the prospect of ejectment being revived is unclear. Harris' summary judgment does not end the complex case, in which ground rent holders seek damages from the state that could run into hundreds of millions of dollars. That trial has yet to begin. The state also could appeal Harris' decision.

Still, the ruling, as a class action, could affect the more than 85,000 properties in the state's ground rent registry, plus those that aren't registered. Most are in Baltimore.

"We have said from the beginning that this law is unconstitutional, and now the court has agreed with us," said Edward J. Meehan, who represents the ground rent holders. Asked about resolving the case out of court — including with new legislation next year — he said: "We are always willing to talk."

The state attorney general's office declined to comment. Lawyers are reviewing the five-page ruling, said spokesman David Paulson.

This is the second blow to ground rent reform measures created after The Baltimore Sun published articles showing cases of people losing their homes for not paying ground rent, and the ruling relied on the rationale behind the Court of Appeals' opinion in the earlier case.

This fall, the state's highest court erased a key provision of the law that created a ground rent registry. The court said unregistered ground rents could not be canceled because that move illegally takes the ground rent holders' property. That decision affected an estimated 30,000 to 40,000 ground rents.

A throwback to the 1600s, ground rent separates the land from the house on it, creating a lease for the land.

andrea.siegel@baltsun.com

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