EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb0118*
HOUSE BILL 118
N1 3lr0511
(PRE–FILED) CF 3lr1197
By: Delegate Holmes
Requested: October 5, 2022
Introduced and read first time: January 11, 2023
Assigned to: Environment and Transportation
A BILL ENTITLED
AN ACT concerning 1
Ground Leases – Notices and Billing – Forms and Requirements 2
FOR the purpose of prohibiting a leasehold tenant of an unregistered ground lease from 3
being required to hold more than a certain amount of ground rent in escrow; 4
requiring a ground lease holder to mail certain notices and bills to a leasehold tenant 5
in a certain manner under certain circumstances and prohibiting the ground lease 6
holder from requiring the leasehold tenant to reimburse the ground lease holder for 7
the mailing expenses; requiring the State Department of Assessments and Taxation 8
to develop and make available on its website certain form notices and bills; requiring 9
a ground lease transferee to send notice of a ground lease transfer to the State 10
Department of Assessments and Taxation within a certain period of time; and 11
generally relating to ground leases. 12
BY renumbering 13
Article – Real Property 14
Section 8–801(b) through (f) 15
to be Section 8–801(c) through (g), respectively 16
Annotated Code of Maryland 17
(2015 Replacement Volume and 2022 Supplement) 18
BY repealing and reenacting, with amendments, 19
Article – Real Property 20
Section 8–707, 8–805(a) and (d)(1)(iii) and (v) and (3)(ii), 8–807(a), (c), and (d), 8–809, 21
and 8–810 22
Annotated Code of Maryland 23
(2015 Replacement Volume and 2022 Supplement) 24
BY repealing and reenacting, without amendments, 25
Article – Real Property 26
Section 8–801(a) 27 2 HOUSE BILL 118
Annotated Code of Maryland 1
(2015 Replacement Volume and 2022 Supplement) 2
BY adding to 3
Article – Real Property 4
Section 8–801(b) and 8–801.1 5
Annotated Code of Maryland 6
(2015 Replacement Volume and 2022 Supplement) 7
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 8
That Section(s) 8–801(b) through (f) of Article – Real Property of the Annotated Code of 9
Maryland be renumbered to be Section(s) 8–801(c) through (g), respectively. 10
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 11
as follows: 12
Article – Real Property 13
8–707. 14
If a ground lease is not registered in accordance with this [subtitle, the] SUBTITLE: 15
(1) THE ground lease holder may not: 16
[(1)] (I) Collect any ground rent payments due under the ground lease; 17
[(2)] (II) Bring a civil action against the leasehold tenant to enforce any 18
rights the ground lease holder may have under the ground lease; or 19
[(3)] (III) Bring an action against the leasehold tenant under Subtitle 8 of 20
this title; AND 21
(2) THE LEASEHOLD TENANT OF THE UNREGISTERED GROUND LEASE 22
MAY NOT BE REQUIRED TO HOLD MORE THAN 3 YEARS OF GROUND RENT IN ESCROW 23
FOR THE UNREGISTERED GROUND LEASE. 24
8–801. 25
(a) In this subtitle the following words have the meanings indicated. 26
(B) “DEPARTMENT ” MEANS THE STATE DEPARTMENT OF ASSESSMENTS 27
AND TAXATION. 28
8–801.1. 29
HOUSE BILL 118 3
(A) THE GENERAL ASSEMBLY DECLARES THA T IT IS IN THE PUBLIC 1
INTEREST FOR GROUND RENTS TO BE REDEEMED . 2
(B) IT IS THE INTENT OF THE GENERAL ASSEMBLY THAT THE DEPARTMENT 3
USE ITS GROUND RENT REDEMPTION PROGRAM T O ASSIST IN THE REDEMPTION OF 4
GROUND RENTS . 5
8–805. 6
(a) (1) In this section the following words have the meanings indicated. 7
(2) [“Department” means the State Department of Assessments and 8
Taxation. 9
(3)] “Irredeemable ground rent” means a ground rent created under a 10
ground lease executed before April 9, 1884, that does not contain a provision allowing the 11
leasehold tenant to redeem the ground rent. 12
[(4)] (3) “Redeemable ground rent” means a ground rent that may be 13
redeemed in accordance with this section or redeemed or extinguished in accordance with 14
§ 8–804(f) of this subtitle. 15
(d) (1) To be effective and to be entitled to be recorded, the notice shall be 16
executed by the ground lease holder, acknowledged before a notary public, and contain 17
substantially the following information: 18
(iii) The name of every leasehold tenant as of the time the notice is 19
filed according to the land records or the records of the [State] Department [of Assessments 20
and Taxation]; 21
(v) The recording reference of every leasehold tenant’s leasehold 22
deed, as of the time the notice is filed, according to the land records or the records of the 23
[State] Department [of Assessments and Taxation]; 24
(3) The notice shall be indexed as “Notice of Intention to Preserve 25
Irredeemability”: 26
(ii) In the grantor indices of deeds under the name of every leasehold 27
tenant as of the time the notice is filed according to the land records or the records of the 28
[State] Department [of Assessments and Taxation]; and 29
8–807. 30
(a) For property subject to a ground lease in effect on or after July 1, 2007, a 31
ground lease holder may bring an action for possession for nonpayment of ground rent only: 32
4 HOUSE BILL 118
(1) If the ground lease holder has the lawful right to claim possession for 1
nonpayment of ground rent; 2
(2) If the ground lease is registered with the [State] Department [of 3
Assessments and Taxation] under Subtitle 7 of this title; 4
(3) If the payment of ground rent is at least 6 months in arrears; and 5
(4) As provided under this section. 6
(c) (1) (I) No less than 60 days before filing an action for possession, the 7
ground lease holder shall send a notice, in the form required under paragraph (2) of this 8
subsection, to the leasehold tenant’s last known address AND TO THE PREMISES ADDRESS 9
as shown in the records of the [State] Department [of Assessments and Taxation, or other 10
place of business or residence if known,] by[: 11
(i) First–class mail;] FIRST–CLASS MAIL and 12
[(ii) Certified] CERTIFIED mail, return receipt requested. 13
(II) IF A LEASEHOLD TENANT’S LAST KNOWN MAILING ADDRESS 14
AND THE PREMISES ADDRESS LIS TED IN THE RECORDS OF THE DEPARTMENT ARE 15
DIFFERENT, THE GROUND LEASE HOL DER SHALL MAIL ONE COPY OF THE NOTICE BY 16
FIRST–CLASS MAIL AND ONE C OPY OF THE NOTICE BY CERTIFIED MAIL , RETURN 17
RECEIPT REQUESTED, TO EACH ADDRESS , RESPECTIVELY . 18
(III) A GROUND LEASE HOLDER MAY NOT REQUI RE A LEASEHOLD 19
TENANT TO REIMBURSE THE GROUND LEASE HOL DER FOR COSTS INCURRED IN 20
PROVIDING NOTICE REQUIRED UNDE R THIS SUBSECTION . 21
(2) The DEPARTMENT SHALL DEVELOP AND MAKE AVAILABLE ON IT S 22
WEBSITE A FORM NOTICE FOR USE BY A GROUND LEASE HOLDE R TO PROVIDE TO A 23
LEASEHOLD TENANT THE notice required under paragraph (1) of this subsection [shall be 24
in substantially the same form as the notice contained on the Web site of the State 25
Department of Assessments and Taxation]. 26
(3) If authorized under the ground lease, a ground lease holder may be 27
reimbursed for reasonable late fees, interest, collection costs, and expenses not exceeding 28
$100, provided the outstanding amount due is paid after the notice sent under paragraph 29
(1) of this subsection and before a notice is sent under subsection (d) of this section. 30
(d) (1) (I) After notice has been sent under subsection (c) of this section and 31
no [less] FEWER than 30 days before filing an action for possession, the ground lease holder 32
shall send a notice, in the form required under paragraph (2) of this subsection, to the 33
leasehold tenant’s last known address AND TO THE PREMISES ADDRESS as shown in the 34 HOUSE BILL 118 5
records of the [State] Department [of Assessments and Taxation, or other place of business 1
or residence if known,] by[: 2
(i) First–class mail;] FIRST–CLASS MAIL and 3
[(ii) Certified] CERTIFIED mail, return receipt requested. 4
(II) IF A LEASEHOLD TENANT ’S LAST KNOWN MAILING ADDRESS 5
AND THE PREMISES ADD RESS LISTED IN THE R ECORDS OF THE DEPARTMENT ARE 6
DIFFERENT, THE GROUND LEASE HOL DER SHALL MAIL ONE COPY OF THE NOTI CE BY 7
FIRST–CLASS MAIL AND ONE C OPY OF THE NOTICE BY CERTIFIED MAIL , RETURN 8
RECEIPT REQUESTED, TO EACH ADDRESS , RESPECTIVELY. 9
(III) A GROUND LEASE HOLDER MAY NOT REQUIRE A LE ASEHOLD 10
TENANT TO REIMBURSE THE GROUND LEASE HOL DER FOR COSTS INCURR ED IN 11
PROVIDING NOTICE REQ UIRED UNDER THIS SUB SECTION. 12
(2) (I) The DEPARTMENT SHALL DEVE LOP AND MAKE AVAILAB LE 13
ON ITS WEBSITE A FORM NOTICE FOR USE BY A GROUND LEASE HO LDER TO PROVIDE 14
TO A LEASEHOLD TENAN T THE notice required under paragraph (1) of this subsection. 15
(II) THE FORM shall be in 14 point bold font and [include] REQUIRE 16
THE FOLLOWING : 17
[(i)] 1. An itemized bill for the payment due; 18
[(ii)] 2. The amount necessary to cure the default, including late 19
fees, interest, collection costs, and expenses authorized under paragraph (3) of this 20
subsection; 21
[(iii)] 3. The name and address of the person to whom to send the 22
payment due; 23
[(iv)] 4. The name and contact information of the person to contact 24
for questions about the notice; and 25
[(v)] 5. A statement that unless the default is cured in 30 days: 26
[1.] A. The ground lease holder intends to file an action for 27
possession; and 28
[2.] B. The leasehold tenant may be liable for reimbursing 29
the ground lease holder for expenses and costs incurred in connection with the collection of 30
past due ground rent and the filing of the action for possession. 31
6 HOUSE BILL 118
(3) If authorized under the ground lease, a ground lease holder may be 1
reimbursed for reasonable late fees, interest, collection costs, and expenses not exceeding 2
$650, including: 3
(i) Title abstract and examination fees; 4
(ii) Judgment report costs; 5
(iii) Photocopying and postage fees; and 6
(iv) Attorney’s fees. 7
8–809. 8
(a) (1) A ground lease holder may not collect a yearly or half –yearly 9
installment payment of a ground rent due under the ground lease unless: 10
[(1)] (I) The ground lease is registered with the [State] Department [of 11
Assessments and Taxation] under Subtitle 7 of this title; and 12
[(2)] (II) At least 60 days before the payment is due, the ground lease 13
holder mails a bill, IN THE FORM REQUIRED UNDER SUBSECTION (B) OF THIS 14
SECTION, to the last known address of the leasehold tenant and to the PREMISES address 15
of the property subject to the ground lease LISTED IN THE RECORD S OF THE 16
DEPARTMENT . 17
(2) IF A LEASEHOLD TENANT ’S LAST KNOWN MAILING ADDRESS AND 18
THE PREMISES ADDRESS LIS TED IN THE RECORDS OF THE DEPARTMENT ARE 19
IDENTICAL, THE GROUND LEASE HOL DER SHALL MAIL ONE C OPY OF THE BILL TO 20
THE ADDRESS BY FIRST –CLASS MAIL AND ONE C OPY OF THE BILL TO THE ADDRESS 21
BY CERTIFIED MAIL , RETURN RECEIPT REQUESTED . 22
(3) IF A LEASEHOLD TENANT ’S LAST KNOWN MAILING ADDRESS AND 23
PREMISES ADDRESS LIS TED IN THE RECORDS O F THE DEPARTMENT ARE 24
DIFFERENT, THE GROUND LEASE HOL DER SHALL MAIL ONE COPY OF THE BILL BY 25
FIRST–CLASS MAIL AND ONE COPY OF THE BILL BY CERTIFIED MAIL, RETURN 26
RECEIPT REQUESTED , TO EACH ADDRESS , RESPECTIVELY . 27
(4) A GROUND LEASE HOLDER MAY NOT REQUIRE THE LEASEHOLD 28
TENANT TO REIMBURSE THE GROUND LEASE HOL DER FOR COSTS INCURR ED TO 29
PROVIDE A BILL UNDER THIS SUBSECTION . 30
(b) (1) THE DEPARTMENT SHALL DEVELOP AND MAKE AVAILABLE ON IT S 31
WEBSITE A FORM BILL FOR USE BY A GROUND LEASE HOLDER. 32
HOUSE BILL 118 7
(2) The FORM bill MADE AVAILABLE ON THE DEPARTMENT ’S WEBSITE 1
shall include a notice in boldface type, at least as large as 14 point, in substantially the 2
following form: 3
“NOTICE REQUIRED BY MARYLAND LAW 4
REGARDING YOUR GROUND RENT 5
This property (address) is subject to a ground lease. The annual payment on the ground 6
lease (“ground rent”) is $(dollar amount), payable in yearly or half–yearly installments on 7
(date or dates). 8
The next ground rent payment is due (day, month, year) in the amount of $(dollar amount). 9
The payment of the ground rent should be sent to: 10
(name of ground lease holder) 11
(address) 12
(phone number) 13
NOTE REGARDING YOUR RIGHTS AND RESPONSIBILITIES UNDER MARYLAND 14
LAW: 15
The ground lease holder is required to register the ground lease with the State Department 16
of Assessments and Taxation and is prohibited from collecting ground rent payments unless 17
the ground lease is registered. If the ground lease is registered, as the owner of this 18
property, you are obligated to pay the ground rent to the ground lease holder. To determine 19
whether the ground lease is registered, you may check the [Web site] WEBSITE of the State 20
Department of Assessments and Taxation. It is also your responsibility to notify the ground 21
lease holder if you change your address or transfer ownership of the property. 22
If you fail to pay the ground rent on time, you are still responsible for paying the ground 23
rent. In addition, if the ground lease holder files an action in court to collect the past due 24
ground rent, you may be required to pay the ground lease holder for fees and costs 25
associated with the collection of the past due ground rent. In addition, the ground lease 26
holder may also file an action in court to take possession of the property, which may result 27
in your being responsible for additional fees and costs and ultimately in your loss of the 28
property. Please note that under Maryland law, a ground lease holder may demand not 29
more than 3 years of past due ground rent, and there are limits on how much a ground 30
lease holder may be reimbursed for fees and costs. If you fail to pay the ground rent on 31
time, you should contact a lawyer for advice. 32
As the owner of this property, you are entitled to redeem, or purchase, the ground lease 33
from the ground lease holder and obtain absolute ownership of the property. Unless you 34
and the ground lease holder agree to a lesser amount, the amount to redeem your ground 35
lease is _______. If you wish to redeem the ground lease, contact the ground lease holder. If 36
the identity of the ground lease holder is unknown, the State Department of Assessments 37
and Taxation provides a process to redeem the ground lease that may result in your 38 8 HOUSE BILL 118
obtaining absolute ownership of the property. If you would like to obtain absolute 1
ownership of this property, you should contact a lawyer for advice.”. 2
8–810. 3
(a) Within 30 days after any transfer of a ground lease, the transferee shall notify 4
the leasehold tenant AND THE DEPARTMENT of the transfer. 5
(b) (1) The notification shall include the name and address of the new ground 6
lease holder and the date of the transfer. 7
(2) If the property is subject to a redeemable ground rent, the notification 8
shall also include the following notice: 9
“As the owner of the property subject to this ground lease, you are entitled to redeem, 10
or purchase, the ground lease from the ground lease holder and obtain absolute ownership 11
of the property. The redemption amount is fixed by law but may also be negotiated with 12
the ground lease holder for a different amount. For information on redeeming the ground 13
lease, contact the ground lease holder.” 14
(c) (1) A ground lease holder shall send notice under this section to the last 15
known address of the leasehold tenant AND THE PREMISES ADDRESS LIS TED IN THE 16
RECORDS OF THE DEPARTMENT BY FIRST –CLASS MAIL AND CERTI FIED MAIL, 17
RETURN RECEIPT REQUESTED . 18
(2) IF A LEASEHOLD TENANT ’S LAST KNOWN MAILING ADDRESS AND 19
PREMISES ADDRESS LIS TED IN THE RECORDS O F THE DEPARTMENT ARE 20
DIFFERENT, THE GROUND LEASE HOL DER SHALL MAIL ONE C OPY OF THE NOTICE BY 21
FIRST–CLASS MAIL AND ONE C OPY OF THE NOTICE BY CERTIFIED MAIL , RETURN 22
RECEIPT REQUESTED , TO EACH ADDRESS , RESPECTIVELY . 23
(3) A GROUND LEASE HOLDER MAY NOT REQUIRE A LE ASEHOLD 24
TENANT TO REIMBURSE THE GROUND LEASE HOL DER FOR COSTS INCURR ED IN 25
PROVIDING NOTICE REQ UIRED UNDER THIS SEC TION. 26
SECTION 3. AND BE IT FURTHER ENAC TED, That this Act shall take effect 27
October 1, 2023. 28