On May 8, 2007, Governor O’Malley signed House Bill 580 - “Ground Rents – Registry of Properties Subject to Ground Leases” - which became Chapter 290 of the Laws of 2007. The law provided for the creation of an on-line registry of properties that are subject to ground rents and required that all ground rent owners must register every ground rent owned by the owner with the State Department of Assessments and Taxation (SDAT) and pay a fee by September 30, 2010 or else risk having said ground rent interest extinguished.
Now that September 30th is fast approaching, what's going to change?
According to at least one of our underwriters, Fidelity National Title Group, absolutely nothing. This is because there is a pending lawsuit [Charles Muskin vs. State Department of Assessments and Taxation (Case Number 24C10004437)] which if successful will deem the ground rent legislation as unconstitutional and will bar its enforcement. So long as this case is active, Fidelity tells us, we are to treat ground rents as we always have and will not render a ground rent as extinguished just because it fails to appear in the registry.
Note that this just one underwriter's position, but we fully expect the other major title insurance companies to follow suit in the coming days. We will continue to update you on what other title insurance companies are doing as well as the status of the case and how it affects this legislation. Stay tuned!
UPDATE: On September 24th, another one of our underwriters, First American, sent us a memo with substantially the same information as the earlier Fidelity notice. This is now the second underwriter who has told us "business as usual" with respect to ground rents.