A Review of Ground Leases in Maryland

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In Maryland, some homeowners are required to pay ground rent to either an individual or a company who is the ground rent holder. (Most of these properties are in Baltimore City.)

what is a ground lease

I know- the entire concept of ground leases and ground rent, which dates back to the 1700s, can be confusing to both homeowners and unfamiliar mortgage companies..

So… What is a a ground lease? What about ground rent?

According to The People’s Law Library of Maryland:
“Ground rent is a periodic monetary payment by a tenant to a ground lease holder who holds a reversionary interest in the property or ‘ground’ underneath a home.”

As a homeowner, even if your property is subject to a ground lease (typically a small sum— of $50 – $100 annually to the ground lease holder), you still own the entire property as described in the deed.

Here’s what you may not know— You own ALL of the house, the property, and the land described in your deed.

However, ground lease holders only have the right to collect the ground rent. Yes, that’s there one and only right.

What happens if I don’t pay the ground rent?

If a homeowner doesn’t pay the ground rent, the ground lease holder can obtain a judgment against them and file a lien against the property for up to three years of past due ground rent, not to mention other legal fees and attorney fees. Moreover, for homeowners who are more than six months late on paying their ground rent, ground lease holders can file to evict those homeowners from their property.

How do I know if I my property is subject to a ground lease?

Per the deed—
If your property is conveyed in fee simple, there is no ground rent. 
If the property is conveyed in leasehold, the property is subject to ground rent. 

Ground rent holders are required to register ground leases with the Maryland State Department of Assessments and Taxation (SDAT).  You can find the ground rent registry on their website:  dat.maryland.gov/Ground-Rent

How do I redeem a ground lease?

Any ground rent established after April 8, 1884, can be redeemed by a homeowner or a property buyer. On each ground rent bill, ground lease owners are required to provide information on how to redeem the ground rent. Additionally, the ground lease owner is required to sell you the ground rent if you wish to purchase it.

The cost for redeeming the ground rent varies based on the year it was created. The formula for determining the price is to take the annual ground rent fee and divide it by a range of .04 to .12, depending on the year created:

  • Prior to April 8, 1884 – Negotiable (may not be redeemable)
  • April 8, 1884 to April 5, 1888 – (4% rate of redemption)
  • April 6, 1888 to July 1, 1982 – (6% rate of redemption)
  • July 2, 1982 to Present – (12% rate of redemption)

For example— If your annual ground rent is $150, and it was established between April 6, 1888 and July 1, 1982, it would cost $2,500 to redeem.

$150  ÷ .06 = $2,500

However, the parties can agree to a lesser amount.  Once the property owner agrees to redemption terms with the ground rent holder, the parties must file a Deed of Redemption with the Land Records of the County in which the property is located. An attorney can prepare a Deed of Redemption and record it for approximately $400.

redeem a Maryland ground lease

Financial Assistance with Redeeming a Ground Lease

A program has been established by the Maryland General Assembly to provide loans to eligible homeowners to redeem ground leases. For more information contact: Department of Housing & Community Development Ground Rent Redemption Loans​.

What if I can’t find the ground lease holder?

The Maryland State Department of Assessments and Taxation (SDAT) no longer maintains a ground rent registry to help homeowners determine who owns their ground rent. Owners were required to enter their ground rents by September 30, 2010 or forfeit all rights to collection.

If you can’t find the ground lease holder or if the address of the ground lease holder is unknown, post the Notice of Application For A Ground Rent Redemption.  This Notice must be posted in a conspicuous place on your property for (30) days.

  1. ​Post the Notice of Application For A Ground Rent Redemption​.  This Notice must be posted in a conspicuous place on your property for thirty (30) days; and
  2. Prepare an affidavit setting forth your efforts to investigate and discover the last known address of the landlord. You may use the Residential Ground Rent Redemption Affidavit or draft your own affidavit.​​

In a sales transaction, is the listing agent responsible for knowing whether a listed property carries ground rent?

A: Yes. It’s the listing agent’s responsibility to determine from the seller whether a listed property carries ground rent—and, if so, how much. It is not a prospective buyer’s responsibility to investigate this information.

Because a ground rent registry no longer exists, real estate agents can search for ground rents using the SDAT’s Real Property Data Search. 

Recent Legislative Changes

The 2020 Maryland legislature passed several bills, including a few pertaining to ground leases. These passed bills are effective October 1, 2020.

Let’s take a closer look…

Senate Bill 170/House Bill 241

These two bills address past due ground rent. Ground lease holders are no longer permitted to bring legal action against either a former or current tenant for any past due ground rent that a tenant owed before the current tenant acquired the residential ground lease. However, this is only prohibited in cases in which the ground lease wasn’t registered with the Maryland State Department of Assessments and Taxation (SDAT) before the current tenant acquired title to the leasehold interest in the property.

House Bill 149

This bill permits a ground lease tenant (or interested party) to send documentation of a ground lease redemption to SDAT when the redemption was a private transaction between the ground lease holder and the tenant. This documentation is required to include a certified copy of the ground lease redemption deed that was filed in the county land records.

The law requires the ground lease holder to provide SDAT with the redemption documentation, but often holders fail to do so. Now, the tenant can take care of sending in the required documentation.

House Bill 172

This bill repealed the fee for registering a ground lease with SDAT. Until October 1, 2020, ground lease holders pay $10 for the first ground lease and $5 for each additional one.

House Bill 1182/SB 806

This bill, effective as of October 1, 2020, provides a clearer process to redeem a ground rent that may have multiple subleases.

For more information

If you have questions about ground rent in Maryland:
Email: sdat.groundrent@maryland.gov​ (preferred method of communication)
Telephone: 410-767-1151

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