A state program to assist low-income homebuyers would be expanded to facilitate the purchase of ground rents under a bill approved unanimously by the Senate yesterday.
The bill is the last in a package of reforms debated by the General Assembly this year for Maryland's centuries-old system of ground rents - leases for the land under tens of thousands of Baltimore rowhouses. The effort was sparked by a series of articles in The Sun last year detailing cases in which people lost their homes over unpaid ground rent. In some instances, ground rent holders seized homes over initial debts of as little as $24.
Most of the legislation this year aimed to protect homeowners whose property is subject to ground rent, but this bill was designed to help end the system entirely.
"This is the best way of getting rid of ground rents," said Sen. Lisa A. Gladden, a Baltimore Democrat who helped lead the ground rent reforms. "It's a great bill."
Gary R. Alexander, a lobbyist for the Ground Rent Owners Coalition, has said that his clients would like to see the state enact legislation to phase out the ground rent system by requiring people to buy out the rents when they buy, transfer or refinance a home. On the loan bill, though, his group did not take a position.
"We have so much else going on with ground rents, we were just not involved in that," he said.
The bill passed yesterday would expand the Maryland Home Financing Program, which makes low-interest loans to those with limited incomes to buy, rehabilitate or refinance a home. The program also provides below-market rate construction financing for low-income housing as well as assistance for those who can't make their mortgage payments.
General Assembly analysts estimate that there are 116,000 ground rents in Maryland, most of which can be purchased by homeowners at any time.
The cost to purchase a ground rent is typically about $2,500, including legal fees, but varies based on the amount of the annual ground rent and the date when it was established.
A few, dating before 1884, cannot be bought out, but another piece of legislation, which has also passed the House and Senate and is awaiting final approval, would help convert them to the more modern, redeemable variety of ground rents.
Any ground rents established since 1982 cannot be redeemed for the first five years of their existence.
The legislation doesn't allocate any new money to help with conversion of ground rents. The Department of Housing and Community Development has about $500,000 in the budget for the fiscal year that begins July 1 for the home financing program, but the bill doesn't require any specific amount be allocated to ground rent conversion.
Other reforms that have passed both chambers of the General Assembly include a measure to end the process of "ejectment" by which ground rent holders are able to seize the homes of those who fall behind on payments; a prohibition on new ground rents; and increased notification requirements for homeowners.
Those bills still require final approval by the General Assembly, though that step is considered a formality.