EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW. [Brackets] indicate matter deleted from existing law. *sb0901* SENATE BILL 901 N1 4lr2384 By: Senator West Introduced and read first time: February 2, 2024 Assigned to: Judicial Proceedings A BILL ENTITLED AN ACT concerning 1 Ground Leases – Application for Redemption – Procedures 2 FOR the purpose of altering certain requirements for a leasehold tenant to apply to redeem 3 a certain ground lease; and generally relating to ground lease redemption. 4 BY repealing and reenacting, without amendments, 5 Article – Real Property 6 Section 8–804(a) and (f)(3) 7 Annotated Code of Maryland 8 (2023 Replacement Volume) 9 BY repealing and reenacting, with amendments, 10 Article – Real Property 11 Section 8–804(b) and (f)(1), (2), and (4) 12 Annotated Code of Maryland 13 (2023 Replacement Volume) 14 SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 15 That the Laws of Maryland read as follows: 16 Article – Real Property 17 8–804. 18 (a) (1) Except as provided in subsection (f) of this section, this section does not 19 apply to irredeemable ground leases preserved under § 8–805 of this subtitle. 20 (2) This section does not apply to an affordable housing land trust 21 agreement executed under Title 14, Subtitle 5 of this article. 22 2 SENATE BILL 901 (b) (1) (I) Except for apartment and cooperative leases AND SUBJECT TO 1 SUBPARAGRAPH (II) OF THIS PARAGRAPH , any reversion reserved in a ground lease for 2 longer than 15 years is redeemable at any time, at the option of the leasehold tenant[, 3 after]. 4 (II) IF A GROUND LEASE IS REGISTERE D IN ACCORDANCE WITH 5 SUBTITLE 7 OF THIS TITLE, THE LEASEHOLD TENANT MUST PROVIDE 30 days’ notice 6 to the ground lease holder[. Notice shall be given] by certified mail, return receipt 7 requested, and by first–class mail to the last known address of the ground lease holder, 8 BEFORE THE LEASEHOLD TENANT MAY REDEEM THE GROUND LEASE. 9 (2) The reversion is redeemable: 10 (i) For a sum equal to the annual ground rent reserved multiplied 11 by: 12 1. 25, which is capitalization at 4 percent, if the ground lease 13 was executed from April 8, 1884, to April 5, 1888, both inclusive; 14 2. 8.33, which is capitalization at 12 percent, if the ground 15 lease was or is created after July 1, 1982; or 16 3. 16.66, which is capitalization at 6 percent, if the ground 17 lease was created at any other time; 18 (ii) For a lesser sum if specified in the ground lease; or 19 (iii) For a sum to which the parties may agree at the time of 20 redemption. 21 (3) (i) If the leasehold tenant is in default under a security instrument, 22 the holder of the secured interest in the property that is subject to a ground lease, or any 23 portion of a ground lease, that is recorded in the land records of the county in which the 24 property is located may apply to the State Department of Assessments and Taxation to 25 redeem the reversion as provided under this section. 26 (ii) If a holder of a secured interest applies to redeem a reversion as 27 authorized under subparagraph (i) of this paragraph, the holder also shall pay to the 28 ground lease holder the outstanding amount due, including, if authorized under the ground 29 lease, reasonable late fees, interest, collection costs, and expenses as provided under § 30 8–807 of this subtitle. 31 (f) (1) (i) A leasehold tenant who [has given the ground lease holder notice 32 in accordance with] IS AUTHORIZED TO RED EEM A GROUND RENT UN DER subsection 33 (b) of this section may apply to the Department to redeem [a] THE ground rent as provided 34 in this subsection. 35 SENATE BILL 901 3 (ii) When the Mayor and City Council of Baltimore City acquires 1 property that is subject to an irredeemable ground rent, the City shall become the leasehold 2 tenant of the ground rent and, after giving the ground lease holder notice in accordance 3 with subsection (b) of this section, may apply to the Department to extinguish the ground 4 rent as provided in this subsection. 5 (iii) When the Mayor and City Council of Baltimore City acquires 6 abandoned or distressed property that is subject to a redeemable ground rent, the City shall 7 become the leasehold tenant of the ground rent and, after giving the ground lease holder 8 notice in accordance with subsection (b) of this section, may apply to the Department to 9 redeem the ground rent as provided in this subsection. 10 (2) The leasehold tenant shall provide to the Department: 11 (i) Documentation satisfactory to the Department of the ground 12 lease and, IF THE GROUND LEASE WAS REGISTERED IN AC CORDANCE WITH SUBTITLE 13 7 OF THIS TITLE WHEN T HE LEASEHOLD TENANT APPLIED FOR THE ISSU ANCE OF A 14 REDEMPTION CERTIFICA TE, OF the notice given to the ground lease holder; and 15 (ii) Payment of a $20 fee, PAYMENT OF THE REDEM PTION 16 AMOUNT, and any expediting fee required under § 1–203 of the Corporations and 17 Associations Article. 18 (3) (i) On receipt of the items stated in paragraph (2) of this subsection, 19 the Department shall post notice on its website that application has been made to redeem 20 or extinguish the ground rent. 21 (ii) The notice shall remain posted for at least 90 days. 22 (4) Except as provided in paragraph (5) of this subsection, [a] IF A 23 GROUND LEASE WAS REG ISTERED IN ACCORDANC E WITH SUBTITLE 7 OF THIS TITLE 24 AT THE TIME OF APPLI CATION FOR A REDEMPTION CER TIFICATE, THE leasehold 25 tenant seeking to redeem [a] THE ground rent shall provide to the Department: 26 (i) Payment of [the redemption amount and] up to 3 years’ past due 27 ground rent to the extent required under this section and § 8–806 of this subtitle, in a form 28 satisfactory to the Department; and 29 (ii) An affidavit made by the leasehold tenant, in the form adopted 30 by the Department, certifying that: 31 1. The leasehold tenant has not received a bill for ground 32 rent due or other communication from the ground lease holder regarding the ground rent 33 during the 3 years immediately before the filing of the documentation required for the 34 issuance of a redemption certificate under this subsection; or 35 4 SENATE BILL 901 2. The last payment for ground rent was made to the ground 1 lease holder identified in the affidavit and sent to the same address where the notice 2 required under subsection (b) of this section was sent. 3 SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 4 October 1, 2024. 5