What is the status of ground rents in Maryland now? The Court in Muskin v. State Department of Assessment and Taxation recently overturned a key part of the law which extinguished unregistered ground rents. Under the Ground Rent Act of 2007, ground rent leaseholders were given three years to register ground rents with the State Department of Assessments and Taxation (SDAT) or the ground rent would be subject to being extinguished by statute. Of course there was a challenge to this law. The recent ruling by the Court said this extinguishment by statute was an unconstitutional taking of property. What does this ruling mean for realtors, lenders, and title companies? Any Certificate of Extinguishment issued by the SDAT is void and has no effect. The ruling did leave the requirement to register ground rents in tact, but unfortunately there is no penalty for failing to do so. This means that realtors must be careful to make sure and clarify at the time of listing of a property if the property is really the subject of a ground rent. It also means that lenders and title companies will continue to require proof of ground rent payment and many times require escrows for ground rents. You may visit the SDAT website at the link to follow for more information about ground rent registration or redemption: http://www.dat.state.md.us/sdatweb/Register_groundrent.html. Please feel free to contact any of the attorneys at Lakeside Title Company when you have questions about ground rents. We are happy to try to assist you. #410-992-1070
