WES MOORE, Governor Ch. 183
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Chapter 183
(House Bill 93)
AN ACT concerning
Residential Ground Leases – Redemption and Extinguishment – Requirements
FOR the purpose of repealing a prohibition against a leasehold tenant who is seeking to
redeem or extinguish a ground rent providing certain documentation and payment
to the State Department of Assessments and Taxation earlier than 90 days after the
application for redemption or extinguishment has been posted on the Department’s
website; and generally relating to ground leases.
BY renumbering
Article – Real Property
Section 8–801(b) through (f)
to be Section 8–801(c) through (g), respectively
Annotated Code of Maryland
(2015 Replacement Volume and 2022 Supplement)
BY repealing and reenacting, without amendments,
Article – Real Property
Section 8–801(a) and 8–804(a)
Annotated Code of Maryland
(2015 Replacement Volume and 2022 Supplement)
BY adding to
Article – Real Property
Section 8–801(b)
Annotated Code of Maryland
(2015 Replacement Volume and 2022 Supplement)
BY repealing and reenacting, with amendments,
Article – Real Property
Section 8–804(f)
Annotated Code of Maryland
(2015 Replacement Volume and 2022 Supplement)
SECTION 1. BE IT ENACT ED BY THE GENERAL ASSEMBLY OF MARYLAND,
That Section(s) 8–801(b) through (f) of Article – Real Property of the Annotated Code of
Maryland be renumbered to be Section(s) 8–801(c) through (g), respectively.
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read
as follows:
Article – Real Property Ch. 183 2023 LAWS OF MARYLAND
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8–801.
(a) In this subtitle the following words have the meanings indicated.
(B) “DEPARTMENT ” MEANS THE STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION.
8–804.
(a) (1) Except as provided in subsection (f) of this section, this section does not
apply to irredeemable ground leases preserved under § 8–805 of this subtitle.
(2) This section does not apply to an affordable housing land trust
agreement executed under Title 14, Subtitle 5 of this article.
(f) (1) (i) A leasehold tenant who has given the ground lease holder notice
in accordance with subsection (b) of this section may apply to the [State] Department [of
Assessments and Taxation] to redeem a ground rent as provided in this subsection.
(ii) When the Mayor and City Council of Baltimore City acquires
property that is subject to an irredeemable ground rent, the City shall become the leasehold
tenant of the ground rent and, after giving the ground lease holder notice in accordance
with subsection (b) of this section, may apply to the [State] Department [of Assessments
and Taxation] to extinguish the ground rent as provided in this subsection.
(iii) When the Mayor and City Council of Baltimore City acquires
abandoned or distressed property that is subject to a redeemable ground rent, the City shall
become the leasehold tenant of the ground rent and, after giving the ground lease holder
notice in accordance with subsection (b) of this section, may apply to the [State]
Department [of Assessments and Taxation] to redeem the ground rent as provided in this
subsection.
(2) The leasehold tenant shall provide to the [State] Department [of
Assessments and Taxation]:
(i) Documentation satisfactory to the Department of the ground
lease and the notice given to the ground lease holder; and
(ii) Payment of a $20 fee, and any expediting fee required under §
1–203 of the Corporations and Associations Article.
(3) (i) On receipt of the items stated in paragraph (2) of this subsection,
the Department shall post notice on its website that application has been made to redeem
or extinguish the ground rent. WES MOORE, Governor Ch. 183
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(ii) The notice shall remain posted for at least 90 days.
(4) Except as provided in paragraph (5) of this subsection, [no earlier than
90 days after the application has been posted as provided in paragraph (3) of this
subsection,] a leasehold tenant seeking to redeem a ground rent shall provide to the
Department:
(i) Payment of the redemption amount and up to 3 years’ past due
ground rent to the extent required under this section and § 8–806 of this subtitle, in a form
satisfactory to the Department; and
(ii) An affidavit made by the leasehold tenant, in the form adopted
by the Department, certifying that:
1. The leasehold tenant has not received a bill for ground
rent due or other communication from the ground lease holder regarding the ground rent
during the 3 years immediately before the filing of the documentation required for the
issuance of a redemption certificate under this subsection; or
2. The last payment for ground rent was made to the ground
lease holder identified in the affidavit and sent to the same address where the notice
required under subsection (b) of this section was sent.
(5) [No earlier than 90 days after the application has been posted as
provided in paragraph (3) of this subsection, a] A leasehold tenant seeking to extinguish
an irredeemable ground rent or to redeem a redeemable ground rent on abandoned or
distressed property that was acquired or is being acquired by the Mayor and City Council
of Baltimore shall provide to the Department:
(i) Payment of up to 3 years’ past due ground rent to the extent
required under this section and § 8–806 of this subtitle, in a form satisfactory to the
Department; and
(ii) An affidavit made by the Commissioner of the Baltimore City
Department of Housing and Community Development or the Commissioner’s designee
certifying that:
1. The property is abandoned property, as defined in §
21–17(a)(2) of the Public Local Laws of Baltimore City, or distressed property, as defined
in § 21–17(a)(3) of the Public Local Laws of Baltimore City;
2. The property was acquired or is being acquired by the
Mayor and City Council of Baltimore City; and
Ch. 183 2023 LAWS OF MARYLAND
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3. The existence of the ground rent is an impediment to
redevelopment of the site.
(6) At any time, the leasehold tenant may submit to the Department notice
that the leasehold tenant is no longer seeking redemption or extinguishment under this
subsection.
(7) [Upon receipt of the documentation, fees, and, where applicable, the
redemption amount and 3 years’ past due ground rent to the extent required under this
section and § 8–806 of this subtitle, the] THE Department shall issue to [the] A leasehold
tenant a ground rent redemption certificate or a ground rent extinguishment certificate, as
appropriate, WHEN:
(I) NOTICE THAT APPLICATI ON HAS BEEN MADE TO REDEEM
OR EXTINGUISH THE GROUND RENT HAS BEEN POSTED ON THE DEPARTMENT ’S
WEBSITE FOR AT LEAST 90 DAYS; AND
(II) THE DEPARTMENT HAS RECEIV ED THE DOCUMENTATION ,
FEES, AND, WHERE APPLICABLE , THE REDEMPTION AMOUN T AND 3 YEARS’ PAST
DUE GROUND RENT TO T HE EXTENT REQUIRED U NDER THIS SECTI ON AND § 8–806
OF THIS SUBTITLE .
(8) The redemption or extinguishment of the ground rent is effective to
conclusively divest the ground lease holder of the reversion and vest the reversion in the
leasehold tenant, and eliminate all right, title, or interest of the ground lease holder, any
lien of a creditor of the ground lease holder, and any person claiming by, through, or under
the ground lease holder when the leasehold tenant records the certificate in the land
records of the county in which the property is located.
(9) The ground lease holder, any creditor of the ground lease holder, or any
other person claiming by, through, or under the ground lease holder may file a claim with
the Department in order to collect all, or any portion of, where applicable, the redemption
amount and 3 years’ past due ground rent to the extent required under this section and §
8–806 of this subtitle, without interest, by providing to the Department:
(i) Documentation satisfactory to the Department of the claimant’s
interest; and
(ii) Payment of a $20 fee, and any expediting fee required under §
1–203 of the Corporations and Associations Article.
(10) (i) A ground lease holder whose ground rent has been extinguished
may file a claim with the Baltimore City Director of Finance to collect an amount equal to
the annual ground rent reserved multiplied by 16.66, which is capitalization at 6 percent,
by providing to the Director: WES MOORE, Governor Ch. 183
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1. Proof of payment to the ground lease holder by the
Department of past due ground rent under paragraph (9) of this subsection; and
2. Payment of a $20 fee.
(ii) A ground lease holder of abandoned or distressed property
acquired by the Mayor and City Council of Baltimore City whose ground rent has been
redeemed may file a claim with the Baltimore City Director of Finance to collect the
redemption amount, by providing to the Director:
1. Proof of payment to the ground lease holder by the
Department of past due ground rent under paragraph (9) of this subsection; and
2. Payment of a $20 fee.
(11) (i) In the event of a dispute regarding the extinguishment amount
as calculated under paragraph (10)(i) of this subsection, the ground lease holder may refuse
payment from the Baltimore City Director of Finance and file an appeal regarding the
valuation in the Circuit Court of Baltimore City.
(ii) In an appeal, the ground lease holder is entitled to receive the
fair market value of the ground lease holder’s interest in the property at the time of the
extinguishment.
(12) In the event of a dispute regarding the payment by the Department to
any person of all or any portion of the collected redemption amount and up to 3 years’ past
due ground rent to the extent required by this section and § 8–806 of this subtitle, the
Department may:
(i) File an interpleader action in the circuit court of the county
where the property is located; or
(ii) Reimburse the ground lease holder from the fund established in
§ 1–203.3 of the Corporations and Associations Article.
(13) The Department is not liable for any sum received by the Department
that exceeds the sum of:
(i) The redemption amount; and
(ii) Up to 3 years’ past due ground rent to the extent required by this
section and § 8–806 of this subtitle.
(14) The Department shall credit all fees and funds collected under this
subsection to the fund established under § 1–203.3 of the Corporations and Associations Ch. 183 2023 LAWS OF MARYLAND
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Article. Redemption and extinguishment amounts received shall be held in a ground rent
redemption and ground rent extinguishment account in that fund.
(15) The Department shall maintain a list of properties for which ground
rents have been redeemed or extinguished under this subsection.
(16) The Department shall adopt regulations to carry out the provisions of
this subsection.
(17) Any redemption or extinguishment funds not collected by a ground
lease holder under this subsection within 20 years after the date of the payment to the
Department by the leasehold tenant shall escheat to the State. The Department shall
annually transfer any funds that remain uncollected after 20 years to the State General
Fund at the end of each fiscal year.
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect
October 1, 2023.
Approved by the Governor, April 24, 2023.