Court of Appeals: Ground-Rent Law Unconstitutional

The Maryland Court of Appeals ruled Wednesday that a law taking away the rights of “ground-rent” owners’ ability to seize and sell the homes of tenants who don’t pay was unconstitutional. As reported in the Baltimore Sun:

In the wake of a Baltimore Sun series detailing how ground-rent holders had seized hundreds of homes, sometimes over debts as small as $24, the state legislature banned the practice and ordered other changes to the system.

Before 2007, ground-rent owners seeking to collect unpaid rents could seize homes through “ejectment,” sell them and keep all the money, regardless of the amount in arrears.

Under the new law, ground-rent owners were allowed to foreclose on homeowners to collect unpaid debts, but any sale proceeds left after the debt was paid would go to the homeowner.

The ruling by the Court of Appeals upholds a 2011 decision by an Anne Arundel County circuit judge. In a 5-2 decision, the appeals court found that the 2007 law amounted to an illegal taking of ground-rent owners’ constitutional rights.

Ejectment “must be viewed as an inextricable part of the bundle of vested rights which the Legislature may not abolish retrospectively,” wrote Judge Glenn T. Harrell Jr. on behalf of the court’s majority. Judges Sally D. Adkins and Shirley M. Watts dissented.

While owners of ground rents and their lawyers rejoiced the ruling, others expressed disappointment. The Sun article notes that spokesmen for Governor and the Attorney General stated each are reviewing the decision.  Sen. Brian E. Frosh who worked on the reform effort also weighed in noting that it was probably too late in this legislative session for the legislature to address the court’s decision and that the ruling will continue to lead to great inequities.

Read the full article in The Baltimore Sun for more information.

For more information on the history of ground rents in Maryland, visit The People’s Law Library of Maryland.

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