EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*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
Committee Report: Favorable
Senate action: Adopted
Read second time: February 24, 2023
CHAPTER ______
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 2 SENATE BILL 196
(2015 Replacement Volume and 2022 Supplement) 1
BY repealing and reenacting, with amendments, 2
Article – Real Property 3
Section 8–804(f) 4
Annotated Code of Maryland 5
(2015 Replacement Volume and 2022 Supplement) 6
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 7
That Section(s) 8–801(b) through (f) of Article – Real Property of the Annotated Code of 8
Maryland be renumbered to be Section(s) 8–801(c) through (g), respectively. 9
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 10
as follows: 11
Article – Real Property 12
8–801. 13
(a) In this subtitle the following words have the meanings indicated. 14
(B) “DEPARTMENT ” MEANS THE STATE DEPARTMENT OF ASSESSMENTS 15
AND TAXATION. 16
8–804. 17
(a) (1) Except as provided in subsection (f) of this section, this section does not 18
apply to irredeemable ground leases preserved under § 8–805 of this subtitle. 19
(2) This section does not apply to an affordable housing land trust 20
agreement executed under Title 14, Subtitle 5 of this article. 21
(f) (1) (i) A leasehold tenant who has given the ground lease holder notice 22
in accordance with subsection (b) of this section may apply to the [State] Department [of 23
Assessments and Taxation] to redeem a ground rent as provided in this subsection. 24
(ii) When the Mayor and City Council of Baltimore City acquires 25
property that is subject to an irredeemable ground rent, the City shall become the leasehold 26
tenant of the ground rent and, after giving the ground lease holder notice in accordance 27
with subsection (b) of this section, may apply to the [State] Department [of Assessments 28
and Taxation] to extinguish the ground rent as provided in this subsection. 29
(iii) When the Mayor and City Council of Baltimore City acquires 30
abandoned or distressed property that is subject to a redeemable ground rent, the City shall 31
become the leasehold tenant of the ground rent and, after giving the ground lease holder 32
notice in accordance with subsection (b) of this section, may apply to the [State] 33 SENATE BILL 196 3
Department [of Assessments and Taxation] to redeem the ground rent as provided in this 1
subsection. 2
(2) The leasehold tenant shall provide to the [State] Department [of 3
Assessments and Taxation]: 4
(i) Documentation satisfactory to the Department of the ground 5
lease and the notice given to the ground lease holder; and 6
(ii) Payment of a $20 fee, and any expediting fee required under § 7
1–203 of the Corporations and Associations Article. 8
(3) (i) On receipt of the items stated in paragraph (2) of this subsection, 9
the Department shall post notice on its website that application has been made to redeem 10
or extinguish the ground rent. 11
(ii) The notice shall remain posted for at least 90 days. 12
(4) Except as provided in paragraph (5) of this subsection, [no earlier than 13
90 days after the application has been posted as provided in paragraph (3) of this 14
subsection,] a leasehold tenant seeking to redeem a ground rent shall provide to the 15
Department: 16
(i) Payment of the redemption amount and up to 3 years’ past due 17
ground rent to the extent required under this section and § 8–806 of this subtitle, in a form 18
satisfactory to the Department; and 19
(ii) An affidavit made by the leasehold tenant, in the form adopted 20
by the Department, certifying that: 21
1. The leasehold tenant has not received a bill for ground 22
rent due or other communication from the ground lease holder regarding the ground rent 23
during the 3 years immediately before the filing of the documentation required for the 24
issuance of a redemption certificate under this subsection; or 25
2. The last payment for ground rent was made to the ground 26
lease holder identified in the affidavit and sent to the same address where the notice 27
required under subsection (b) of this section was sent. 28
(5) [No earlier than 90 days after the application has been posted as 29
provided in paragraph (3) of this subsection, a] A leasehold tenant seeking to extinguish 30
an irredeemable ground rent or to redeem a redeemable ground rent on abandoned or 31
distressed property that was acquired or is being acquired by the Mayor and City Council 32
of Baltimore shall provide to the Department: 33
4 SENATE BILL 196
(i) Payment of up to 3 years’ past due ground rent to the extent 1
required under this section and § 8–806 of this subtitle, in a form satisfactory to the 2
Department; and 3
(ii) An affidavit made by the Commissioner of the Baltimore City 4
Department of Housing and Community Development or the Commissioner’s designee 5
certifying that: 6
1. The property is abandoned property, as defined in § 7
21–17(a)(2) of the Public Local Laws of Baltimore City, or distressed property, as defined 8
in § 21–17(a)(3) of the Public Local Laws of Baltimore City; 9
2. The property was acquired or is being acquired by the 10
Mayor and City Council of Baltimore City; and 11
3. The existence of the ground rent is an impediment to 12
redevelopment of the site. 13
(6) At any time, the leasehold tenant may submit to the Department notice 14
that the leasehold tenant is no longer seeking redemption or extinguishment under this 15
subsection. 16
(7) [Upon receipt of the documentation, fees, and, where applicable, the 17
redemption amount and 3 years’ past due ground rent to the extent required under this 18
section and § 8–806 of this subtitle, the] THE Department shall issue to [the] A leasehold 19
tenant a ground rent redemption certificate or a ground rent extinguishment certificate, as 20
appropriate, WHEN: 21
(I) NOTICE THAT APPLICATI ON HAS BEEN MADE TO REDEEM 22
OR EXTINGUISH THE GR OUND RENT HAS BEEN P OSTED ON THE DEPARTMENT ’S 23
WEBSITE FOR AT LEAS T 90 DAYS; AND 24
(II) THE DEPARTMENT HAS RECEIV ED THE DOCUMENTATION , 25
FEES, AND, WHERE APPLICABLE , THE REDEMPTION AMOUN T AND 3 YEARS’ PAST 26
DUE GROUND RENT TO T HE EXTENT REQUIRED U NDER THIS SECTION AN D § 8–806 27
OF THIS SUBTITLE . 28
(8) The redemption or extinguishment of the ground rent is effective to 29
conclusively divest the ground lease holder of the reversion and vest the reversion in the 30
leasehold tenant, and eliminate all right, title, or interest of the ground lease holder, any 31
lien of a creditor of the ground lease holder, and any person claiming by, through, or under 32
the ground lease holder when the leasehold tenant records the certificate in the land 33
records of the county in which the property is located. 34
(9) The ground lease holder, any creditor of the ground lease holder, or any 35
other person claiming by, through, or under the ground lease holder may file a claim with 36 SENATE BILL 196 5
the Department in order to collect all, or any portion of, where applicable, the redemption 1
amount and 3 years’ past due ground rent to the extent required under this section and § 2
8–806 of this subtitle, without interest, by providing to the Department: 3
(i) Documentation satisfactory to the Department of the claimant’s 4
interest; and 5
(ii) Payment of a $20 fee, and any expediting fee required under § 6
1–203 of the Corporations and Associations Article. 7
(10) (i) A ground lease holder whose ground rent has been extinguished 8
may file a claim with the Baltimore City Director of Finance to collect an amount equal to 9
the annual ground rent reserved multiplied by 16.66, which is capitalization at 6 percent, 10
by providing to the Director: 11
1. Proof of payment to the ground lease holder by the 12
Department of past due ground rent under paragraph (9) of this subsection; and 13
2. Payment of a $20 fee. 14
(ii) A ground lease holder of abandoned or distressed property 15
acquired by the Mayor and City Council of Baltimore City whose ground rent has been 16
redeemed may file a claim with the Baltimore City Director of Finance to collect the 17
redemption amount, by providing to the Director: 18
1. Proof of payment to the ground lease holder by the 19
Department of past due ground rent under paragraph (9) of this subsection; and 20
2. Payment of a $20 fee. 21
(11) (i) In the event of a dispute regarding the extinguishment amount 22
as calculated under paragraph (10)(i) of this subsection, the ground lease holder may refuse 23
payment from the Baltimore City Director of Finance and file an appeal regarding the 24
valuation in the Circuit Court of Baltimore City. 25
(ii) In an appeal, the ground lease holder is entitled to receive the 26
fair market value of the ground lease holder’s interest in the property at the time of the 27
extinguishment. 28
(12) In the event of a dispute regarding the payment by the Department to 29
any person of all or any portion of the collected redemption amount and up to 3 years’ past 30
due ground rent to the extent required by this section and § 8–806 of this subtitle, the 31
Department may: 32
(i) File an interpleader action in the circuit court of the county 33
where the property is located; or 34
6 SENATE BILL 196
(ii) Reimburse the ground lease holder from the fund established in 1
§ 1–203.3 of the Corporations and Associations Article. 2
(13) The Department is not liable for any sum received by the Department 3
that exceeds the sum of: 4
(i) The redemption amount; and 5
(ii) Up to 3 years’ past due ground rent to the extent required by this 6
section and § 8–806 of this subtitle. 7
(14) The Department shall credit all fees and funds collected under this 8
subsection to the fund established under § 1–203.3 of the Corporations and Associations 9
Article. Redemption and extinguishment amounts received shall be held in a ground rent 10
redemption and ground rent extinguishment account in that fund. 11
(15) The Department shall maintain a list of properties for which ground 12
rents have been redeemed or extinguished under this subsection. 13
(16) The Department shall adopt regulations to carry out the provisions of 14
this subsection. 15
(17) Any redemption or extinguishment funds not collected by a ground 16
lease holder under this subsection within 20 years after the date of the payment to the 17
Department by the leasehold tenant shall escheat to the State. The Department shall 18
annually transfer any funds that remain uncollected after 20 years to the State General 19
Fund at the end of each fiscal year. 20
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 21
October 1, 2023. 22
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.