Campaign To "Extinguish" Ground Rents

“I think—see if this is the right one, if not…”

Craig Thomson is using his laptop to look up the ground rent on a city property. Thomson is a real estate agent for Long & Foster. He says some prospective buyers he meets prefer a house with no ground rent.

“Some people see it as an added benefit. Some buyers do. It’s a concept that, ‘You mean I don’t own this ground? And then the idea that I don’t pay the nut on this that I could be evicted?’ Well, yeah. Yeah.”

Not everyone may realize that homeowners have always been able to negotiate directly with ground rent owners to buy out a lease. And in the past decade, the state added several programs to help home owners ditch their ground rent. There’s even a low-interest loan program run by the Department of Housing and Community Development for people who want to purchase their ground outright.

Kathy Howard is an attorney who works for Regional Management Incorporated. It manages 35-hundred ground rents in the Baltimore area. Howard says changes to ground rent laws in 2007 have helped make homeowners more aware — and more willing — to buy out or extinguish their ground rent.

“I mean it’s in the real estate contract, I think there’s a notice in the title paper work. When you get a bill, it’s now mandated that the ground rent owner tell you that it’s a redeemable ground rent. I think that that knowledge has lead people to, you know, really consider going ahead and becoming fee simple owners by redeeming their ground rent.”

The newest program kicked in last October — after a deadline passed in which all ground rents had to be registered with the state. About 30-thousand ground rents never ended up being registered—meaning those homeowners can file for what’s called a certificate of extinguishment. Robert Young is the acting deputy director of the Department of Assessments and Taxation.

“We’ve received approximately 500 requests from homeowners asking for a certificate of extinguishment on their homes.”

Young says another 812 ground rents have been redeemed through a program that allows homeowners to buy out missing or stray ground rent holders. He says there’s no way of knowing how many homeowners have privately bought out their ground rent — or what effect two, ongoing court cases challenging the ground rent reforms will have. Still, he’s expecting more people will want to get rid of their ground rent in the future.

“As the real estate market rebounds, you may get more banks saying to individuals, ‘Well, I’m going to give you a loan on this property but I want you to get rid of the ground rent.’”
 
Thanks to changes in the law, banks can no longer lose their investment due to a ground rent foreclosure. But Young says it’s still one more financial obligation that banks have to service on a mortgage — something they would rather do without.

I'm Sarah Richards, reporting in Baltimore, for 88-1 WYPR.