Ground Rent - United States of America

United States of America

The term ground rent is applied in many U.S. states to a kind of tenure created by a grant in fee simple, the grantor reserving to himself and his heirs a certain rent, which is the interest in the money value of the land. These ground rents are real estate and, in cases of intestacy, go to the heir. They are rent services and not rent charges, the statute Quia Emptores never having been in force in Pennsylvania, and are subject to all the incidents of such rents. The grantee of a ground rent may mortgage, sell, or otherwise dispose of the grant as he pleases and while the rent is paid the land cannot be sold or the value of the improvements lost. The person who owns the land can live on it or they can build a home on it that is sold to other people, while they retain ownership of the land and charge the new home owner ground rent.

A ground rent being a freehold estate, created by deed and perpetual in duration, no presumption that it had been released could, at common law, arise from lapse of time. However, by statute (Act of 27 April 1855, s. 7), a presumption of release or extinguishment is created where no payment, claim or demand has been made for the rent, nor any declaration or acknowledgment of its existence made or given by the owner of the premises subject to it, for the period of 21 years. Ground rents were formerly irredeemable after a certain time but the creation of irredeemable ground rents is now forbidden (Pennsylvania Act 7 Assembly, 22 April 1850).

Ground rents are also found in some portions of Maryland, primarily in the Baltimore area. These are typically leases subject to a monthly or annual rent payment. Under Maryland law, if the renter does not pay, the ground owner can go to court and have a lien placed against the house. An emergency bill was presented by Democratic Maryland Governor Martin O'Malley to completely ban new ground rents in Maryland in 2007; the bill was passed by the legislature, though it is being contested in court. Victor Posner began his career in Baltimore in the business of building house shells for Blacks on property retained under ground rents.