MD
Maryland Senate Bill SB196

Maryland 2023 Regular Session

Maryland Senate Bill SB196 Compare Versions

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1- WES MOORE, Governor Ch. 182
21
3-– 1 –
4-Chapter 182
5-(Senate Bill 196)
62
7-AN ACT concerning
3+EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4+ [Brackets] indicate matter deleted from existing law.
5+ Underlining indicates amendments to bill.
6+ Strike out indicates matter stricken from the bill by amendment or deleted from the law by
7+amendment.
8+ *sb0196*
89
9-Residential Ground Leases – Redemption and Extinguishment – Requirements
10+SENATE BILL 196
11+N1 3lr1198
12+ CF HB 93
13+By: Senators Sydnor and Hayes
14+Introduced and read first time: January 20, 2023
15+Assigned to: Judicial Proceedings
16+Committee Report: Favorable
17+Senate action: Adopted
18+Read second time: February 24, 2023
1019
11-FOR the purpose of repealing a prohibition against a leasehold tenant who is seeking to
12-redeem or extinguish a ground rent providing certain documentation and payment
13-to the State Department of Assessments and Taxation earlier than 90 days after the
14-application for redemption or extinguishment has been posted on the Department’s
15-website; and generally relating to ground leases.
20+CHAPTER ______
1621
17-BY renumbering
18- Article – Real Property
19-Section 8–801(b) through (f)
20-to be Section 8–801(c) through (g), respectively
21- Annotated Code of Maryland
22- (2015 Replacement Volume and 2022 Supplement)
22+AN ACT concerning 1
2323
24-BY repealing and reenacting, without amendments,
25- Article – Real Property
26-Section 8–801(a) and 8–804(a)
27- Annotated Code of Maryland
28- (2015 Replacement Volume and 2022 Supplement)
24+Residential Ground Leases – Redemption and Extinguishment – Requirements 2
2925
30-BY adding to
31- Article – Real Property
32- Section 8–801(b)
33- Annotated Code of Maryland
34- (2015 Replacement Volume and 2022 Supplement)
26+FOR the purpose of repealing a prohibition against a leasehold tenant who is seeking to 3
27+redeem or extinguish a ground rent providing certain documentation and payment 4
28+to the State Department of Assessments and Taxation earlier than 90 days after the 5
29+application for redemption or extinguishment has been posted on the Department’s 6
30+website; and generally relating to ground leases. 7
3531
36-BY repealing and reenacting, with amendments,
37- Article – Real Property
38-Section 8–804(f)
39- Annotated Code of Maryland
40- (2015 Replacement Volume and 2022 Supplement)
32+BY renumbering 8
33+ Article – Real Property 9
34+Section 8–801(b) through (f) 10
35+to be Section 8–801(c) through (g), respectively 11
36+ Annotated Code of Maryland 12
37+ (2015 Replacement Volume and 2022 Supplement) 13
4138
42- SECTION 1. BE IT ENACT ED BY THE GENERAL ASSEMBLY OF MARYLAND,
43-That Section(s) 8–801(b) through (f) of Article – Real Property of the Annotated Code of
44-Maryland be renumbered to be Section(s) 8–801(c) through (g), respectively.
39+BY repealing and reenacting, without amendments, 14
40+ Article – Real Property 15
41+Section 8–801(a) and 8–804(a) 16
42+ Annotated Code of Maryland 17
43+ (2015 Replacement Volume and 2022 Supplement) 18
4544
46- SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read
47-as follows:
45+BY adding to 19
46+ Article – Real Property 20
47+ Section 8–801(b) 21
48+ Annotated Code of Maryland 22 2 SENATE BILL 196
4849
49-Article – Real Property Ch. 182 2023 LAWS OF MARYLAND
5050
51-– 2 –
51+ (2015 Replacement Volume and 2022 Supplement) 1
5252
53-8–801.
53+BY repealing and reenacting, with amendments, 2
54+ Article – Real Property 3
55+Section 8–804(f) 4
56+ Annotated Code of Maryland 5
57+ (2015 Replacement Volume and 2022 Supplement) 6
5458
55- (a) In this subtitle the following words have the meanings indicated.
59+ SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 7
60+That Section(s) 8–801(b) through (f) of Article – Real Property of the Annotated Code of 8
61+Maryland be renumbered to be Section(s) 8–801(c) through (g), respectively. 9
5662
57- (B) “DEPARTMENT ” MEANS THE STATE DEPARTMENT OF ASSESSMENTS
58-AND TAXATION.
63+ SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 10
64+as follows: 11
5965
60-8–804.
66+Article – Real Property 12
6167
62- (a) (1) Except as provided in subsection (f) of this section, this section does not
63-apply to irredeemable ground leases preserved under § 8–805 of this subtitle.
68+8–801. 13
6469
65- (2) This section does not apply to an affordable housing land trust
66-agreement executed under Title 14, Subtitle 5 of this article.
70+ (a) In this subtitle the following words have the meanings indicated. 14
6771
68- (f) (1) (i) A leasehold tenant who has given the ground lease holder notice
69-in accordance with subsection (b) of this section may apply to the [State] Department [of
70-Assessments and Taxation] to redeem a ground rent as provided in this subsection.
72+ (B) “DEPARTMENT ” MEANS THE STATE DEPARTMENT OF ASSESSMENTS 15
73+AND TAXATION. 16
7174
72- (ii) When the Mayor and City Council of Baltimore City acquires
73-property that is subject to an irredeemable ground rent, the City shall become the leasehold
74-tenant of the ground rent and, after giving the ground lease holder notice in accordance
75-with subsection (b) of this section, may apply to the [State] Department [of Assessments
76-and Taxation] to extinguish the ground rent as provided in this subsection.
75+8–804. 17
7776
78- (iii) When the Mayor and City Council of Baltimore City acquires
79-abandoned or distressed property that is subject to a redeemable ground rent, the City shall
80-become the leasehold tenant of the ground rent and, after giving the ground lease holder
81-notice in accordance with subsection (b) of this section, may apply to the [State]
82-Department [of Assessments and Taxation] to redeem the ground rent as provided in this
83-subsection.
77+ (a) (1) Except as provided in subsection (f) of this section, this section does not 18
78+apply to irredeemable ground leases preserved under § 8–805 of this subtitle. 19
8479
85- (2) The leasehold tenant shall provide to the [State] Department [of
86-Assessments and Taxation]:
80+ (2) This section does not apply to an affordable housing land trust 20
81+agreement executed under Title 14, Subtitle 5 of this article. 21
8782
88- (i) Documentation satisfactory to the Department of the ground
89-lease and the notice given to the ground lease holder; and
83+ (f) (1) (i) A leasehold tenant who has given the ground lease holder notice 22
84+in accordance with subsection (b) of this section may apply to the [State] Department [of 23
85+Assessments and Taxation] to redeem a ground rent as provided in this subsection. 24
9086
91- (ii) Payment of a $20 fee, and any expediting fee required under §
92-1–203 of the Corporations and Associations Article.
87+ (ii) When the Mayor and City Council of Baltimore City acquires 25
88+property that is subject to an irredeemable ground rent, the City shall become the leasehold 26
89+tenant of the ground rent and, after giving the ground lease holder notice in accordance 27
90+with subsection (b) of this section, may apply to the [State] Department [of Assessments 28
91+and Taxation] to extinguish the ground rent as provided in this subsection. 29
9392
94- (3) (i) On receipt of the items stated in paragraph (2) of this subsection,
95-the Department shall post notice on its website that application has been made to redeem
96-or extinguish the ground rent. WES MOORE, Governor Ch. 182
93+ (iii) When the Mayor and City Council of Baltimore City acquires 30
94+abandoned or distressed property that is subject to a redeemable ground rent, the City shall 31
95+become the leasehold tenant of the ground rent and, after giving the ground lease holder 32
96+notice in accordance with subsection (b) of this section, may apply to the [State] 33 SENATE BILL 196 3
9797
98-– 3 –
9998
100- (ii) The notice shall remain posted for at least 90 days.
99+Department [of Assessments and Taxation] to redeem the ground rent as provided in this 1
100+subsection. 2
101101
102- (4) Except as provided in paragraph (5) of this subsection, [no earlier than
103-90 days after the application has been posted as provided in paragraph (3) of this
104-subsection,] a leasehold tenant seeking to redeem a ground rent shall provide to the
105-Department:
102+ (2) The leasehold tenant shall provide to the [State] Department [of 3
103+Assessments and Taxation]: 4
106104
107- (i) Payment of the redemption amount and up to 3 years’ past due
108-ground rent to the extent required under this section and § 8–806 of this subtitle, in a form
109-satisfactory to the Department; and
105+ (i) Documentation satisfactory to the Department of the ground 5
106+lease and the notice given to the ground lease holder; and 6
110107
111- (ii) An affidavit made by the leasehold tenant, in the form adopted
112-by the Department, certifying that:
108+ (ii) Payment of a $20 fee, and any expediting fee required under § 7
109+1–203 of the Corporations and Associations Article. 8
113110
114- 1. The leasehold tenant has not received a bill for ground
115-rent due or other communication from the ground lease holder regarding the ground rent
116-during the 3 years immediately before the filing of the documentation required for the
117-issuance of a redemption certificate under this subsection; or
111+ (3) (i) On receipt of the items stated in paragraph (2) of this subsection, 9
112+the Department shall post notice on its website that application has been made to redeem 10
113+or extinguish the ground rent. 11
118114
119- 2. The last payment for ground rent was made to the ground
120-lease holder identified in the affidavit and sent to the same address where the notice
121-required under subsection (b) of this section was sent.
115+ (ii) The notice shall remain posted for at least 90 days. 12
122116
123- (5) [No earlier than 90 days after the application has been posted as
124-provided in paragraph (3) of this subsection, a] A leasehold tenant seeking to extinguish
125-an irredeemable ground rent or to redeem a redeemable ground rent on abandoned or
126-distressed property that was acquired or is being acquired by the Mayor and City Council
127-of Baltimore shall provide to the Department:
117+ (4) Except as provided in paragraph (5) of this subsection, [no earlier than 13
118+90 days after the application has been posted as provided in paragraph (3) of this 14
119+subsection,] a leasehold tenant seeking to redeem a ground rent shall provide to the 15
120+Department: 16
128121
129- (i) Payment of up to 3 years’ past due ground rent to the extent
130-required under this section and § 8–806 of this subtitle, in a form satisfactory to the
131-Department; and
122+ (i) Payment of the redemption amount and up to 3 years’ past due 17
123+ground rent to the extent required under this section and § 8–806 of this subtitle, in a form 18
124+satisfactory to the Department; and 19
132125
133- (ii) An affidavit made by the Commissioner of the Baltimore City
134-Department of Housing and Community Development or the Commissioner’s designee
135-certifying that:
126+ (ii) An affidavit made by the leasehold tenant, in the form adopted 20
127+by the Department, certifying that: 21
136128
137- 1. The property is abandoned property, as defined in §
138-21–17(a)(2) of the Public Local Laws of Baltimore City, or distressed property, as defined
139-in § 21–17(a)(3) of the Public Local Laws of Baltimore City;
129+ 1. The leasehold tenant has not received a bill for ground 22
130+rent due or other communication from the ground lease holder regarding the ground rent 23
131+during the 3 years immediately before the filing of the documentation required for the 24
132+issuance of a redemption certificate under this subsection; or 25
140133
141- 2. The property was acquired or is being acquired by the
142-Mayor and City Council of Baltimore City; and
143- Ch. 182 2023 LAWS OF MARYLAND
134+ 2. The last payment for ground rent was made to the ground 26
135+lease holder identified in the affidavit and sent to the same address where the notice 27
136+required under subsection (b) of this section was sent. 28
144137
145-– 4 –
146- 3. The existence of the ground rent is an impediment to
147-redevelopment of the site.
138+ (5) [No earlier than 90 days after the application has been posted as 29
139+provided in paragraph (3) of this subsection, a] A leasehold tenant seeking to extinguish 30
140+an irredeemable ground rent or to redeem a redeemable ground rent on abandoned or 31
141+distressed property that was acquired or is being acquired by the Mayor and City Council 32
142+of Baltimore shall provide to the Department: 33
143+ 4 SENATE BILL 196
148144
149- (6) At any time, the leasehold tenant may submit to the Department notice
150-that the leasehold tenant is no longer seeking redemption or extinguishment under this
151-subsection.
152145
153- (7) [Upon receipt of the documentation, fees, and, where applicable, the
154-redemption amount and 3 years’ past due ground rent to the extent required under this
155-section and § 8–806 of this subtitle, the] THE Department shall issue to [the] A leasehold
156-tenant a ground rent redemption certificate or a ground rent extinguishment certificate, as
157-appropriate, WHEN:
146+ (i) Payment of up to 3 years’ past due ground rent to the extent 1
147+required under this section and § 8–806 of this subtitle, in a form satisfactory to the 2
148+Department; and 3
158149
159- (I) NOTICE THAT APPLICATI ON HAS BEEN MADE TO REDEEM
160-OR EXTINGUISH THE GR OUND RENT HAS BEEN POSTED ON THE DEPARTMENT ’S
161-WEBSITE FOR AT LEAST 90 DAYS; AND
150+ (ii) An affidavit made by the Commissioner of the Baltimore City 4
151+Department of Housing and Community Development or the Commissioner’s designee 5
152+certifying that: 6
162153
163- (II) THE DEPARTMENT HAS RECEIV ED THE DOCUMENTATION ,
164-FEES, AND, WHERE APPLICABLE , THE REDEMPTION AMOUN T AND 3 YEARS’ PAST
165-DUE GROUND RENT TO T HE EXTENT REQUIRED U NDER THIS SECTION AND § 8–806
166-OF THIS SUBTITLE .
154+ 1. The property is abandoned property, as defined in § 7
155+21–17(a)(2) of the Public Local Laws of Baltimore City, or distressed property, as defined 8
156+in § 21–17(a)(3) of the Public Local Laws of Baltimore City; 9
167157
168- (8) The redemption or extinguishment of the ground rent is effective to
169-conclusively divest the ground lease holder of the reversion and vest the reversion in the
170-leasehold tenant, and eliminate all right, title, or interest of the ground lease holder, any
171-lien of a creditor of the ground lease holder, and any person claiming by, through, or under
172-the ground lease holder when the leasehold tenant records the certificate in the land
173-records of the county in which the property is located.
158+ 2. The property was acquired or is being acquired by the 10
159+Mayor and City Council of Baltimore City; and 11
174160
175- (9) The ground lease holder, any creditor of the ground lease holder, or any
176-other person claiming by, through, or under the ground lease holder may file a claim with
177-the Department in order to collect all, or any portion of, where applicable, the redemption
178-amount and 3 years’ past due ground rent to the extent required under this section and §
179-8–806 of this subtitle, without interest, by providing to the Department:
161+ 3. The existence of the ground rent is an impediment to 12
162+redevelopment of the site. 13
180163
181- (i) Documentation satisfactory to the Department of the claimant’s
182-interest; and
164+ (6) At any time, the leasehold tenant may submit to the Department notice 14
165+that the leasehold tenant is no longer seeking redemption or extinguishment under this 15
166+subsection. 16
183167
184- (ii) Payment of a $20 fee, and any expediting fee required under §
185-1–203 of the Corporations and Associations Article.
168+ (7) [Upon receipt of the documentation, fees, and, where applicable, the 17
169+redemption amount and 3 years’ past due ground rent to the extent required under this 18
170+section and § 8–806 of this subtitle, the] THE Department shall issue to [the] A leasehold 19
171+tenant a ground rent redemption certificate or a ground rent extinguishment certificate, as 20
172+appropriate, WHEN: 21
186173
187- (10) (i) A ground lease holder whose ground rent has been extinguished
188-may file a claim with the Baltimore City Director of Finance to collect an amount equal to
189-the annual ground rent reserved multiplied by 16.66, which is capitalization at 6 percent,
190-by providing to the Director: WES MOORE, Governor Ch. 182
174+ (I) NOTICE THAT APPLICATI ON HAS BEEN MADE TO REDEEM 22
175+OR EXTINGUISH THE GR OUND RENT HAS BEEN P OSTED ON THE DEPARTMENT ’S 23
176+WEBSITE FOR AT LEAS T 90 DAYS; AND 24
191177
192-– 5 –
178+ (II) THE DEPARTMENT HAS RECEIV ED THE DOCUMENTATION , 25
179+FEES, AND, WHERE APPLICABLE , THE REDEMPTION AMOUN T AND 3 YEARS’ PAST 26
180+DUE GROUND RENT TO T HE EXTENT REQUIRED U NDER THIS SECTION AN D § 8–806 27
181+OF THIS SUBTITLE . 28
193182
194- 1. Proof of payment to the ground lease holder by the
195-Department of past due ground rent under paragraph (9) of this subsection; and
183+ (8) The redemption or extinguishment of the ground rent is effective to 29
184+conclusively divest the ground lease holder of the reversion and vest the reversion in the 30
185+leasehold tenant, and eliminate all right, title, or interest of the ground lease holder, any 31
186+lien of a creditor of the ground lease holder, and any person claiming by, through, or under 32
187+the ground lease holder when the leasehold tenant records the certificate in the land 33
188+records of the county in which the property is located. 34
196189
197- 2. Payment of a $20 fee.
190+ (9) The ground lease holder, any creditor of the ground lease holder, or any 35
191+other person claiming by, through, or under the ground lease holder may file a claim with 36 SENATE BILL 196 5
198192
199- (ii) A ground lease holder of abandoned or distressed property
200-acquired by the Mayor and City Council of Baltimore City whose ground rent has been
201-redeemed may file a claim with the Baltimore City Director of Finance to collect the
202-redemption amount, by providing to the Director:
203193
204- 1. Proof of payment to the ground lease holder by the
205-Department of past due ground rent under paragraph (9) of this subsection; and
194+the Department in order to collect all, or any portion of, where applicable, the redemption 1
195+amount and 3 years’ past due ground rent to the extent required under this section and § 2
196+8–806 of this subtitle, without interest, by providing to the Department: 3
206197
207- 2. Payment of a $20 fee.
198+ (i) Documentation satisfactory to the Department of the claimant’s 4
199+interest; and 5
208200
209- (11) (i) In the event of a dispute regarding the extinguishment amount
210-as calculated under paragraph (10)(i) of this subsection, the ground lease holder may refuse
211-payment from the Baltimore City Director of Finance and file an appeal regarding the
212-valuation in the Circuit Court of Baltimore City.
201+ (ii) Payment of a $20 fee, and any expediting fee required under § 6
202+1–203 of the Corporations and Associations Article. 7
213203
214- (ii) In an appeal, the ground lease holder is entitled to receive the
215-fair market value of the ground lease holder’s interest in the property at the time of the
216-extinguishment.
204+ (10) (i) A ground lease holder whose ground rent has been extinguished 8
205+may file a claim with the Baltimore City Director of Finance to collect an amount equal to 9
206+the annual ground rent reserved multiplied by 16.66, which is capitalization at 6 percent, 10
207+by providing to the Director: 11
217208
218- (12) In the event of a dispute regarding the payment by the Department to
219-any person of all or any portion of the collected redemption amount and up to 3 years’ past
220-due ground rent to the extent required by this section and § 8–806 of this subtitle, the
221-Department may:
209+ 1. Proof of payment to the ground lease holder by the 12
210+Department of past due ground rent under paragraph (9) of this subsection; and 13
222211
223- (i) File an interpleader action in the circuit court of the county
224-where the property is located; or
212+ 2. Payment of a $20 fee. 14
225213
226- (ii) Reimburse the ground lease holder from the fund established in
227-§ 1–203.3 of the Corporations and Associations Article.
214+ (ii) A ground lease holder of abandoned or distressed property 15
215+acquired by the Mayor and City Council of Baltimore City whose ground rent has been 16
216+redeemed may file a claim with the Baltimore City Director of Finance to collect the 17
217+redemption amount, by providing to the Director: 18
228218
229- (13) The Department is not liable for any sum received by the Department
230-that exceeds the sum of:
219+ 1. Proof of payment to the ground lease holder by the 19
220+Department of past due ground rent under paragraph (9) of this subsection; and 20
231221
232- (i) The redemption amount; and
222+ 2. Payment of a $20 fee. 21
233223
234- (ii) Up to 3 years’ past due ground rent to the extent required by this
235-section and § 8–806 of this subtitle.
224+ (11) (i) In the event of a dispute regarding the extinguishment amount 22
225+as calculated under paragraph (10)(i) of this subsection, the ground lease holder may refuse 23
226+payment from the Baltimore City Director of Finance and file an appeal regarding the 24
227+valuation in the Circuit Court of Baltimore City. 25
236228
237- (14) The Department shall credit all fees and funds collected under this
238-subsection to the fund established under § 1–203.3 of the Corporations and Associations Ch. 182 2023 LAWS OF MARYLAND
229+ (ii) In an appeal, the ground lease holder is entitled to receive the 26
230+fair market value of the ground lease holder’s interest in the property at the time of the 27
231+extinguishment. 28
239232
240-– 6 –
241-Article. Redemption and extinguishment amounts received shall be held in a ground rent
242-redemption and ground rent extinguishment account in that fund.
233+ (12) In the event of a dispute regarding the payment by the Department to 29
234+any person of all or any portion of the collected redemption amount and up to 3 years’ past 30
235+due ground rent to the extent required by this section and § 8–806 of this subtitle, the 31
236+Department may: 32
243237
244- (15) The Department shall maintain a list of properties for which ground
245-rents have been redeemed or extinguished under this subsection.
238+ (i) File an interpleader action in the circuit court of the county 33
239+where the property is located; or 34
240+ 6 SENATE BILL 196
246241
247- (16) The Department shall adopt regulations to carry out the provisions of
248-this subsection.
249242
250- (17) Any redemption or extinguishment funds not collected by a ground
251-lease holder under this subsection within 20 years after the date of the payment to the
252-Department by the leasehold tenant shall escheat to the State. The Department shall
253-annually transfer any funds that remain uncollected after 20 years to the State General
254-Fund at the end of each fiscal year.
243+ (ii) Reimburse the ground lease holder from the fund established in 1
244+§ 1–203.3 of the Corporations and Associations Article. 2
255245
256- SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect
257-October 1, 2023.
246+ (13) The Department is not liable for any sum received by the Department 3
247+that exceeds the sum of: 4
258248
259-Approved by the Governor, April 24, 2023.
249+ (i) The redemption amount; and 5
250+
251+ (ii) Up to 3 years’ past due ground rent to the extent required by this 6
252+section and § 8–806 of this subtitle. 7
253+
254+ (14) The Department shall credit all fees and funds collected under this 8
255+subsection to the fund established under § 1–203.3 of the Corporations and Associations 9
256+Article. Redemption and extinguishment amounts received shall be held in a ground rent 10
257+redemption and ground rent extinguishment account in that fund. 11
258+
259+ (15) The Department shall maintain a list of properties for which ground 12
260+rents have been redeemed or extinguished under this subsection. 13
261+
262+ (16) The Department shall adopt regulations to carry out the provisions of 14
263+this subsection. 15
264+
265+ (17) Any redemption or extinguishment funds not collected by a ground 16
266+lease holder under this subsection within 20 years after the date of the payment to the 17
267+Department by the leasehold tenant shall escheat to the State. The Department shall 18
268+annually transfer any funds that remain uncollected after 20 years to the State General 19
269+Fund at the end of each fiscal year. 20
270+
271+ SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 21
272+October 1, 2023. 22
273+
274+
275+
276+
277+Approved:
278+________________________________________________________________________________
279+ Governor.
280+________________________________________________________________________________
281+ President of the Senate.
282+________________________________________________________________________________
283+ Speaker of the House of Delegates.