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Senate passes ground rent bill

Legislation would require registration in order to collect

By Michael Dresser, The Baltimore Sun

6:54 PM EST, March 1, 2012

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The Maryland Senate unanimously passed legislation Thursday that would require owners of ground rents to register them with the state before they could collect them.

The measure is in response to a court decision overturning a law that attempted to minimize the financial harm to homeowners for unpaid ground rents. The legislation now goes to the House of Delegates, where a similar bill is awaiting a committee vote.

Under the ground rent system, which is prevalent mostly in Baltimore, one person owns an interest in the land on which a house is built and another person owns the structure itself. The ground rent owner is entitled to collect what is usually a modest payment for the use of the land.

In 2006, a series of articles in The Baltimore Sun showed that in some cases homeowners lost homes through a legal process known as "ejectment" for failing to pay ground rents they did not know they owed. In some cases, owners lost their houses over relatively minor debts.

The following year, the legislature passed a law requiring owners of ground rents to register their claims with the State Department of Assessments and Taxation or face invalidation. But some ground rent owners sued in a case that eventually went to the Court of Appeals, which ruled last year that invalidating ground rents unconstitutionally deprived the owners of a property right. The court did uphold the registration requirement.

The new legislation, sponsored by Sen. Lisa A. Gladden, a Baltimore Democrat, seeks to deal with the problems raised by ground rents without what amounts to confiscation of a property right. Instead, Gladden said, it provides that a ground rent cannot be enforced until it is registered. Once a ground rent is registered, she said, an owner could collect up to three years in back payments.

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