It is Time to End the Ground Rent System in Maryland

The Sun article On Shaky Ground makes it clear why.

• In nearly every aspect, the law favors ground rent holders. Homeowners rarely win once a lawsuit is filed. And the longer a case goes on, the more it can cost the homeowner.

• No other private debt collectors in Maryland can obtain rewards so disproportionate to what they are owed. In contrast with a foreclosure, the holder of an overdue ground rent can seize a home, sell it and keep every cent of the proceeds. To prevent a seizure, homeowners almost always have to pay fees that dwarf the amount of rent they owe.

• State law puts the onus on property owners to track down their ground rent owner and make payments, though it's sometimes next to impossible to find that information. No registry of ground rent holders exists, and property deeds typically contain only the barest of details about them.

• Some investors seek out overdue ground rents to purchase, then file lawsuits to take the property built on the land. In some cases, the legal owners of these houses have died, and the law is not clear about whether investors must give relatives a chance to satisfy the debts and keep the homes.

I was also interested to learn that this is a colonial system. Unlike the rest of the nation (excluding Pennsylvania), Maryland has decided to let this relic of the colonial age live on. In Baltimore there is a now a cottage industry for creating ground rent "ejectment" cases. Often the cases aren't challenged in court, and once the homeowner, excuse me, newly homeless person, is put out on the street, the property can be sold for exorbitant amounts. Forget the fact that defendants are being charged more for the fees associated with prosecuting them than for the actual ground rent itself. Forget the fact that the "ejectment" case, often over unpaid amounts as low as $200 a year, can strip a person of their whole life's work in moments.

In the words of a ground rent lawyer in the article, "Business is business."

Ah yes, business:

Thelma Parks, 56, lived for more than two decades in Druid Heights, just a few blocks from the boyhood home of the late Supreme Court Justice Thurgood Marshall, until losing her house last year in an ejectment case. It was filed by a trust set up by Fred Nochumowitz, whose relatives have long held ground rents.

Records show that the Nochumowitz trust bought the ground rent on Parks' house in January 2002. Parks couldn't make her payments, which with the fees for the court action came to "about $1,200," she says. With more time, she says, she could have paid off the $1,200.

After taking her property, the trust sold it to an investment company for $70,000 in September 2005. That company resold it about six months later for $128,000. Parks, meanwhile, was forced to rent in another part of town.

"It ruined every one of my plans," said Parks, who works for the federal government. "They all went out the window. ... I'm going to have to work until I fall apart.

"I can't retire," she said. "Everyone is making a profit from it but me."

I for one don't think this predatory practice of "ejectment" over ground rent should be business as usual.