Ground rent is one of those Baltimore quirks that most people outside the region have never heard of. Many older homes in Baltimore City, and some in Baltimore County and elsewhere, were sold with the land leased instead of sold outright. The homeowner owns the house, but pays a small annual ground rent to whoever holds the ground lease. When you sell, that arrangement has to be dealt with, either by transferring it to the buyer or by redeeming it.
I’m Evan Weissman. I buy houses across Baltimore City and the surrounding counties and run into ground rent regularly. Here’s how it works for sellers, based on Maryland law and the state’s published process.
How ground rent works
In a ground lease, the homeowner holds a long-term leasehold interest in the property, often a 99-year lease renewable forever, and pays an annual rent to the ground rent holder. The amounts are usually small, sometimes under $100 a year, but the arrangement still affects title. Your deed may say “leasehold” rather than “fee simple.”
Step one: find out whether there’s ground rent
Check these sources:
- Your deed. Look for references to a ground rent, a leasehold estate, or an annual rent amount.
- Your bills. Some owners receive a yearly ground rent bill from a holder or management company.
- The state registry. The State Department of Assessments and Taxation links its real property system to the Ground Rent Registry, a statutory online database showing whether a ground lease is registered and details about it (SDAT ground rent page).
- The title search. The title company will find recorded ground leases when you sell.
What redemption means
Redeeming a ground rent means buying out the ground rent holder’s interest so you own the land outright. Under Maryland Real Property section 8-804, most ground leases longer than 15 years are redeemable at the tenant’s option after 30 days’ notice to the ground lease holder, by certified mail with a return receipt and by first-class mail. Some leases that were properly preserved as irredeemable are treated differently, so check the registry. For a ground rent in Parkville or Carney, see how I buy houses in Parkville. For a ground rent around Dundalk, see how I buy houses in Dundalk.
How the redemption amount is calculated
Section 8-804 sets the redemption amount as the annual ground rent multiplied by:
- 25 (capitalization at 4%) for leases executed from April 8, 1884 through April 5, 1888.
- 8.33 (capitalization at 12%) for leases created after July 1, 1982.
- 16.66 (capitalization at 6%) for leases created at any other time.
A lesser amount applies if the lease specifies one, and the parties can also agree on an amount at the time of redemption.
For example, a hypothetical ground rent of $90 a year on a lease from the 1950s would be redeemable for $90 times 16.66, or about $1,499, plus any past-due rent owed.
The state’s redemption process
SDAT describes a step-by-step process on its ground rent page:
- Complete the correct application, depending on whether you’ve received a bill or communication from the ground rent holder in the past three years.
- Mail it to SDAT’s Ground Rent Department with the fee: $20 for regular processing or $70 for expedited processing, according to the page.
- After SDAT approves the application, wait no sooner than 100 days before sending the redemption affidavit and lump-sum payment by certified check.
- SDAT issues a Certificate of Redemption, which you must record with your county’s land records office.
That timeline matters. If you’re selling soon, the state process may not finish before settlement, which is why many sales handle ground rent through the title company instead.
Handling ground rent at settlement
You generally have three choices when selling:
- Transfer it. The buyer takes the house subject to the ground rent and keeps paying it. Some buyers and lenders accept this; others prefer it gone.
- Redeem it at settlement. The title company contacts the ground rent holder, gets a payoff, and pays it from your proceeds, then records the redemption.
- Redeem it before listing. If you have time, completing the redemption in advance removes the issue entirely.
Either way, past-due ground rent should be paid. Unpaid ground rent can create real problems for owners, so don’t ignore bills.
Ground rent in an estate sale
Inherited houses often have ground rent nobody in the family knew about, and bills may have stopped being paid after the owner’s death. If you’re the personal representative, check the registry early and include ground rent in the estate’s plan. My article on selling an inherited Baltimore rowhouse walks through the other city-specific steps.
Related city items
Ground rent sits alongside other Baltimore-specific items a seller handles, including the city lien certificate and any vacant building notice. My lien certificate article explains what the city reports. For other settlement costs, see my article on who pays closing costs in Maryland.
Selling a house with ground rent as is
Ground rent rarely stops a cash sale. The buyer and title company handle the payoff or transfer. If the house also needs repairs or has other title issues, a cash buyer can often address everything at one settlement. My as-is page explains how I approach these houses.
How do I know if my Baltimore house has ground rent?
Check your deed for leasehold language, look for ground rent bills, and search SDAT’s Ground Rent Registry through its real property system. The title search will also reveal it when you sell.
How much does it cost to redeem ground rent in Maryland?
Under Real Property section 8-804, it’s usually the annual rent times 16.66 or 8.33, depending on when the lease was created, unless the lease sets a lower amount or the parties agree on one. Past-due rent may also be owed.
Can I sell a house without redeeming the ground rent?
Yes. The buyer can take the house subject to the ground rent, or the title company can redeem it at settlement from your proceeds.
How long does SDAT’s redemption process take?
SDAT lists about 5 weeks for expedited processing or 9 weeks for regular processing to approve an application, then a waiting period of at least 100 days before the redemption payment is sent.
Talk through your situation
If you’ve found ground rent on a house you’re selling, call or text me at (410) 498-7473. I’ll explain how it would be handled in a sale to me.