Ground Rent Controversy Not An Issue For Worcester

BERLIN – New state
regulations on controversial ground rent leases go into affect across Maryland
this fall, and a class action lawsuit, representing hundreds of thousands of ground
rent leaseholders in the state seeking hundreds of millions of dollars, was
recently certified, but it appears Worcester County will not be a significant
player in the ongoing controversy.

In 2007, the Maryland
General Assembly passed legislation requiring ground rent leaseholders to
register their leases with the state’s Department of Assessment and Taxation
(SDAT) in the wake of a growing controversy over archaic ground rent system in
place in most metropolitan areas on the western shore. After some political
wrangling, those regulations are finally being enacted with an effective date
of Oct. 1.

On or before that date,
ground rent leaseholders across the state are required to register information
about their lease arrangements with SDAT or risk losing their leases. In the
wake of the new ground rent regulations approved by the General Assembly three
years ago, ground rent lease holders across Maryland, concentrated largely in
and around the Baltimore metropolitan area, filed a legal challenge to the Assembly’s
ground rent reforms passed in 2007.

Earlier this month, an
Anne Arundel County judge certified ground leaseholders as a class of
plaintiffs eligible to challenge the reforms. The class action suit could
include as many as 200,000 plaintiffs seeking upwards of $400 million from the

However, Worcester
County will not likely be a meaningful participant in the massive class action
suit over ground rent leases.

According to Robert
Smith, director of SDAT for Worcester County, ground rent leases in the county
are few and far between. Smith said this week the growing angst over ground
rents in many parts of the state has not boiled over in Worcester.

“We have very few, if
any, anymore,” he said. “This has not been a big issue in Worcester. Most of
the ones we had here have been bought out over the years.”

With an abundance of
condos and multi-family dwellings in the county, particularly in the resort
areas, it would appear on the surface ground rents could be a big issue in
Worcester. However, Smith explained most of the old ground rent cases in the
county have been absorbed over the years.

“If a condominium
building has 100 units, then typically, the ground is owned by the 100
shareholders who own the condos and they are assessed on a 100th
share of the value of the land their building sits on,” he said. “The closest
thing we have to it are some of the mobile home parks, but even they are mostly
considered co-ops these days.”