The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Another real estate scam

Jan 8, 2007

When buying a house, everyone assumes the land under the house is part of what they are buying. But in Maryland, someone else has a right to take a fee based on the ownership of the ground under the house.

This scam is called “ground rent,” and it’s a custom dating back to 1632. King Charles I of England granted Lord Charles Calvert possession of an enormous area of land, now all of Maryland. Land could be rented to build on with Lord Calvert’s permission and the payment of an annual ground rent.

Ground rents still exist on more than 100,000 Baltimore properties, according to a recent series in the local newspaper. Two local reporters, studying court records over nine months, found that almost 4,000 cases were brought in court over non-payment of ground rent since 2000. And more than half of these cases were brought by just four groups of real estate owners.

And why wasn’t ground rent paid? For a start, the state of Maryland requires no registration of ground rents. Many people don’t know about it. In many cases, even lawyers and title agents cannot find the owner of a ground rent. Unscrupulous lawyers like those who brought the 4,000 cases in Baltimore certainly don’t make any effort to notify the home-owner.

The owner of the ground rent can legally seize the home for the unpaid bill, sell the house and keep every penny of the sale. A homeowner in East Baltimore almost lost the family home at Christmas over an unpaid ground rent that originally was $24. Before the case was settled, a relative had to pay $18,000 thanks to attorneys’ fees and other legal expenses. The unpaid rent went back 10 years to the point at which the homeowners of record died.

“Ground rents should have been investigated 20 years ago,” said a judge quoted in the newspaper articles on such scams.

Embarrassed by the scandal caused by the newspaper articles, the Democrats now claim they will do something about these unfair practices – trying to make us forget that they have controlled the state legislature in Maryland for most of the 20th century.

In fact, some big money is involved in ground rents. One real estate trust featured in the articles takes in $50,000 per month in ground rent. Apparently the Democrats haven’t wanted to take money from their real estate buddies.