EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0196*
SENATE BILL 196
N1 3lr1198
CF HB 93
By: Senators Sydnor and Hayes
Introduced and read first time: January 20, 2023
Assigned to: Judicial Proceedings
A BILL ENTITLED
AN ACT concerning 1
Residential Ground Leases – Redemption and Extinguishment – Requirements 2
FOR the purpose of repealing a prohibition against a leasehold tenant who is seeking to 3
redeem or extinguish a ground rent providing certain documentation and payment 4
to the State Department of Assessments and Taxation earlier than 90 days after the 5
application for redemption or extinguishment has been posted on the Department’s 6
website; and generally relating to ground leases. 7
BY renumbering 8
Article – Real Property 9
Section 8–801(b) through (f) 10
to be Section 8–801(c) through (g), respectively 11
Annotated Code of Maryland 12
(2015 Replacement Volume and 2022 Supplement) 13
BY repealing and reenacting, without amendments, 14
Article – Real Property 15
Section 8–801(a) and 8–804(a) 16
Annotated Code of Maryland 17
(2015 Replacement Volume and 2022 Supplement) 18
BY adding to 19
Article – Real Property 20
Section 8–801(b) 21
Annotated Code of Maryland 22
(2015 Replacement Volume and 2022 Supplement) 23
BY repealing and reenacting, with amendments, 24
Article – Real Property 25
Section 8–804(f) 26
Annotated Code of Maryland 27 2 SENATE BILL 196
(2015 Replacement Volume and 2022 Supplement) 1
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 2
That Section(s) 8–801(b) through (f) of Article – Real Property of the Annotated Code of 3
Maryland be renumbered to be Section(s) 8–801(c) through (g), respectively. 4
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 5
as follows: 6
Article – Real Property 7
8–801. 8
(a) In this subtitle the following words have the meanings indicated. 9
(B) “DEPARTMENT ” MEANS THE STATE DEPARTMENT OF ASSESSMENTS 10
AND TAXATION. 11
8–804. 12
(a) (1) Except as provided in subsection (f) of this section, this section does not 13
apply to irredeemable ground leases preserved under § 8–805 of this subtitle. 14
(2) This section does not apply to an affordable housing land trust 15
agreement executed under Title 14, Subtitle 5 of this article. 16
(f) (1) (i) A leasehold tenant who has given the ground lease holder notice 17
in accordance with subsection (b) of this section may apply to the [State] Department [of 18
Assessments and Taxation] to redeem a ground rent as provided in this subsection. 19
(ii) When the Mayor and City Council of Baltimore City acquires 20
property that is subject to an irredeemable ground rent, the City shall become the leasehold 21
tenant of the ground rent and, after giving the ground lease holder notice in accordance 22
with subsection (b) of this section, may apply to the [State] Department [of Assessments 23
and Taxation] to extinguish the ground rent as provided in this subsection. 24
(iii) When the Mayor and City Council of Baltimore City acquires 25
abandoned or distressed property that is subject to a redeemable ground rent, the City shall 26
become the leasehold tenant of the ground rent and, after giving the ground lease holder 27
notice in accordance with subsection (b) of this section, may apply to the [State] 28
Department [of Assessments and Taxation] to redeem the ground rent as provided in this 29
subsection. 30
(2) The leasehold tenant shall provide to the [State] Department [of 31
Assessments and Taxation]: 32
SENATE BILL 196 3
(i) Documentation satisfactory to the Department of the ground 1
lease and the notice given to the ground lease holder; and 2
(ii) Payment of a $20 fee, and any expediting fee required under § 3
1–203 of the Corporations and Associations Article. 4
(3) (i) On receipt of the items stated in paragraph (2) of this subsection, 5
the Department shall post notice on its website that application has been made to redeem 6
or extinguish the ground rent. 7
(ii) The notice shall remain posted for at least 90 days. 8
(4) Except as provided in paragraph (5) of this subsection, [no earlier than 9
90 days after the application has been posted as provided in paragraph (3) of this 10
subsection,] a leasehold tenant seeking to redeem a ground rent shall provide to the 11
Department: 12
(i) Payment of the redemption amount and up to 3 years’ past due 13
ground rent to the extent required under this section and § 8–806 of this subtitle, in a form 14
satisfactory to the Department; and 15
(ii) An affidavit made by the leasehold tenant, in the form adopted 16
by the Department, certifying that: 17
1. The leasehold tenant has not received a bill for ground 18
rent due or other communication from the ground lease holder regarding the ground rent 19
during the 3 years immediately before the filing of the documentation required for the 20
issuance of a redemption certificate under this subsection; or 21
2. The last payment for ground rent was made to the ground 22
lease holder identified in the affidavit and sent to the same address where the notice 23
required under subsection (b) of this section was sent. 24
(5) [No earlier than 90 days after the application has been posted as 25
provided in paragraph (3) of this subsection, a] A leasehold tenant seeking to extinguish 26
an irredeemable ground rent or to redeem a redeemable ground rent on abandoned or 27
distressed property that was acquired or is being acquired by the Mayor and City Council 28
of Baltimore shall provide to the Department: 29
(i) Payment of up to 3 years’ past due ground rent to the extent 30
required under this section and § 8–806 of this subtitle, in a form satisfactory to the 31
Department; and 32
(ii) An affidavit made by the Commissioner of the Baltimore City 33
Department of Housing and Community Development or the Commissioner’s designee 34
certifying that: 35
4 SENATE BILL 196
1. The property is abandoned property, as defined in § 1
21–17(a)(2) of the Public Local Laws of Baltimore City, or distressed property, as defined 2
in § 21–17(a)(3) of the Public Local Laws of Baltimore City; 3
2. The property was acquired or is being acquired by the 4
Mayor and City Council of Baltimore City; and 5
3. The existence of the ground rent is an impediment to 6
redevelopment of the site. 7
(6) At any time, the leasehold tenant may submit to the Department notice 8
that the leasehold tenant is no longer seeking redemption or extinguishment under this 9
subsection. 10
(7) [Upon receipt of the documentation, fees, and, where applicable, the 11
redemption amount and 3 years’ past due ground rent to the extent required under this 12
section and § 8–806 of this subtitle, the] THE Department shall issue to [the] A leasehold 13
tenant a ground rent redemption certificate or a ground rent extinguishment certificate, as 14
appropriate, WHEN: 15
(I) NOTICE THAT APPLICATI ON HAS BEEN MADE TO REDEEM 16
OR EXTINGUISH THE GR OUND RENT HAS BEEN POSTED ON THE DEPARTMENT ’S 17
WEBSITE FOR AT LEAST 90 DAYS; AND 18
(II) THE DEPARTMENT HAS RECEIV ED THE DOCUMENTATION , 19
FEES, AND, WHERE APPLICABLE , THE REDEMPTION AMOUN T AND 3 YEARS’ PAST 20
DUE GROUND RENT TO T HE EXTENT REQUIRED U NDER THIS SECTI ON AND § 8–806 21
OF THIS SUBTITLE . 22
(8) The redemption or extinguishment of the ground rent is effective to 23
conclusively divest the ground lease holder of the reversion and vest the reversion in the 24
leasehold tenant, and eliminate all right, title, or interest of the ground lease holder, any 25
lien of a creditor of the ground lease holder, and any person claiming by, through, or under 26
the ground lease holder when the leasehold tenant records the certificate in the land 27
records of the county in which the property is located. 28
(9) The ground lease holder, any creditor of the ground lease holder, or any 29
other person claiming by, through, or under the ground lease holder may file a claim with 30
the Department in order to collect all, or any portion of, where applicable, the redemption 31
amount and 3 years’ past due ground rent to the extent required under this section and § 32
8–806 of this subtitle, without interest, by providing to the Department: 33
(i) Documentation satisfactory to the Department of the claimant’s 34
interest; and 35
SENATE BILL 196 5
(ii) Payment of a $20 fee, and any expediting fee required under § 1
1–203 of the Corporations and Associations Article. 2
(10) (i) A ground lease holder whose ground rent has been extinguished 3
may file a claim with the Baltimore City Director of Finance to collect an amount equal to 4
the annual ground rent reserved multiplied by 16.66, which is capitalization at 6 percent, 5
by providing to the Director: 6
1. Proof of payment to the ground lease holder by the 7
Department of past due ground rent under paragraph (9) of this subsection; and 8
2. Payment of a $20 fee. 9
(ii) A ground lease holder of abandoned or distressed property 10
acquired by the Mayor and City Council of Baltimore City whose ground rent has been 11
redeemed may file a claim with the Baltimore City Director of Finance to collect the 12
redemption amount, by providing to the Director: 13
1. Proof of payment to the ground lease holder by the 14
Department of past due ground rent under paragraph (9) of this subsection; and 15
2. Payment of a $20 fee. 16
(11) (i) In the event of a dispute regarding the extinguishment amount 17
as calculated under paragraph (10)(i) of this subsection, the ground lease holder may refuse 18
payment from the Baltimore City Director of Finance and file an appeal regarding the 19
valuation in the Circuit Court of Baltimore City. 20
(ii) In an appeal, the ground lease holder is entitled to receive the 21
fair market value of the ground lease holder’s interest in the property at the time of the 22
extinguishment. 23
(12) In the event of a dispute regarding the payment by the Department to 24
any person of all or any portion of the collected redemption amount and up to 3 years’ past 25
due ground rent to the extent required by this section and § 8–806 of this subtitle, the 26
Department may: 27
(i) File an interpleader action in the circuit court of the county 28
where the property is located; or 29
(ii) Reimburse the ground lease holder from the fund established in 30
§ 1–203.3 of the Corporations and Associations Article. 31
(13) The Department is not liable for any sum received by the Department 32
that exceeds the sum of: 33
(i) The redemption amount; and 34 6 SENATE BILL 196
(ii) Up to 3 years’ past due ground rent to the extent required by this 1
section and § 8–806 of this subtitle. 2
(14) The Department shall credit all fees and funds collected under this 3
subsection to the fund established under § 1–203.3 of the Corporations and Associations 4
Article. Redemption and extinguishment amounts received shall be held in a ground rent 5
redemption and ground rent extinguishment account in that fund. 6
(15) The Department shall maintain a list of properties for which ground 7
rents have been redeemed or extinguished under this subsection. 8
(16) The Department shall adopt regulations to carry out the provisions of 9
this subsection. 10
(17) Any redemption or extinguishment funds not collected by a ground 11
lease holder under this subsection within 20 years after the date of the payment to the 12
Department by the leasehold tenant shall escheat to the State. The Department shall 13
annually transfer any funds that remain uncollected after 20 years to the State General 14
Fund at the end of each fiscal year. 15
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 16
October 1, 2023. 17