For anyone interested in the history of ground rents in Baltimore City,
one of the best sources is Parceling Out
Land in Baltimore, 1632-1796 by Garrett Power (reprinted from the Maryland
Historical Magazine in 1993). Another useful study is Ground
Rents in Maryland with an Introduction concerning the Tenure of land under
the Proprietary, by Lewis Mayer, 1883. See also Professor
Power's comparative study of Baltimore
and Birmingham, England, and his response to specific questions
regarding ground rents and the constitutionality of two bills regarding
ground rents under consideration in the 2007 session of the General Assembly:
Professor Power was asked to comment on the nature of the title that
ground rent holders have in a piece of property:
1. The owner of the ground rent ( aka landlord, lessor) has a future "non-possessory" interest called a reversion --a third party can not adversely possess a non-possessory future interest by demanding and or collecting the rent payments.
He was also asked for his opinion of the constitutionality of two of the bills considered by the General Assembly during the 2007 session:
2. The holder of a ground rent does not actually own the land; he actually holds a lien for rent payments which are if not repaid
entitle him to bring an ejectment action. If the ground rent is abandoned it vests fee simple title in the leaseholder (aka tenant , lessor) not the state. There is no escheat.
Re: Constitutional Analysis of Ground Rent Reform Legislation
From: Professor Garrett Power, University of Maryland School of Law
Date: February 2, 2007
MARYLAND SENATE BILL 396--Ground Rents—Remedy for Non-payment
This bill would repeal the existing law authorizing a landlord (the holder of the reversionary interest under a ground lease) to bring an action in ejectment for non-payment of ground rent, and would instead authorize the landlord to enforce and foreclose a lien to collect the unpaid the ground rent. Its validity is subject to serious constitutional challenge under two section of the United States Constitution.
Impairment of the Obligation of Contracts
Article I, section 10 of the Constitutions prohibits the States from passing laws impairing the obligation of contract. It was included by the founding fathers because of their concern that debtors might use the democratic legislative process to devalue fairly agreed upon contractually obligations. The Federalist, No. 44.
Senate Bill 396 is designed and intended to deprive creditor landlords of an effective remedy used to secure payment of a lawful debt and to replace it with a less effective remedy. It may not destroy the contract, but it without question impairs the security of the landlord’s expectation.
The U.S. Supreme Court precedent most on point is Home B & L Assoc. v. Blaisdell, 290 U.S. 398 (1934). Therein the Court upheld the validity of a depression- era Minnesota Mortgage Moratorium Law that postponed the foreclosure of mortgages. The Court recognized that the law impaired the obligations of the mortgage contract but held that the “original” meaning of the clause must be “adapted to the various crises of human affairs.” There is a clear and present possibility that today’s Supreme Court would overturn the Blaisdell precedent and find Senate Bill 396 unconstitutional.
“Taking” clause Fourteenth Amendment
The Fourteenth Amendment has been interpreted to render unconstitutional state regulations that have the effect of taking private property. In determining whether there is a “taking” the Supreme Court has use an ad hoc balancing test to determine whether a regulation goes “too far.” Although the economic impact of the Senate Bill 396 on the mortgage creditor’s security does not appear substantial the law is a direct assault on the creditor “investment -backed expectation.” It abrogates the creditor’s fee simple interest in the property and replaces it with a lien that less- effectively secures the creditor’s loan. Senate bill 396 may be held to violate the Fourteenth Amendment.
MARYLAND SENATE BILL 622—Ground Rents—Limitations of Actions— Registry of Ground Leases
This bill uses the doctrine adverse possession to extinguish ground leases and to vest fee simple title in the ground rent tenant when there is no demand or payment of the ground rent for three consecutive years. It also establishes an electronic registry of ground lease and requires the ground rent landlord to either register information concerning payment of the ground rent in a timely manner, or have the ground rent extinguished thereby vesting fee simple title in the ground rent tenant. This law might be challenged as violative of the Due Process Clause of the Fourteenth Amendment
“Due Process” clause of the Fourteenth Amendment
The doctrine of adverse possession, and the extinguishment of property interests that are not recordation / registration in a timely fashion are time honored principles of property law. [See, for example Annotated Code of Maryland, Real Property, Title 6 that extinguishes various property interests if not recorded in a timely manner] A three year period of limitation gives the ground rent landlord an ample opportunity to keep the ground lease in effect. Senate Bill 622 is constitutional.
A respected member of the Surveying community added his comments as to whether or not a leaseholder or lessee could claim adverse possession of a lease because ground rent had not been paid for 20 years, and whether or not the State had a reversionary/escheat interest in the ground rent if it had not been paid:
1. Adverse possession is driven by statute, which sets forth the required elements, the most notable of which is POSSESSION. Your scenario [of demanding and accepting payment of ground rent for 20 years] does not presume that the pseudo "landlord" has actual possession, and so it would fail that test. Merely getting repeated payments from someone who doesn't know that he actually has fee title himself amounts to constitutional stupidity perhaps, but not adverse possession. And if title is not vested in the ground rent payor but is in a third party, your collecting payments from the payor does not impact the actual owner's interest. The underpinning of the adverse possession concept is Notice --, in the form of open, notorious possession, not merely the passage of time.An example of the complexity of determining ground rents in Baltimore City is represented by research on 122-124 East Churchill Street (Block 906, Lot 59). The ground rents on this property were first created by an heir of John Eager Howard following distribution of his estate in 1829. See “Lot 379” on Montgomery Street from the 1828 Chancery Case No. 8863, Howard v. Read. The ground rents for this particular address originated in two leases and two sub-leases executed in 1849. The total amount of the original ground rent due yearly for 99 years was $87.79, renewable. In addition, that same year, sub-rents were created in the amount of $56.43, 99 years renewable.
2. Fee title cannot be abandoned. Period. Good MD cases on that. See, for example, Messersmith v. Mayor and Common Council of Riverdale, 162 A.2d 523 (Md. 1960), and Cristofani v. Bd of Education, 632 A.2d 447 (Md. 1993). Even so, it would appear that escheat concerns failed title for lack of heirs. Your question about escheat seems to imply that even if the owner still lives, somehow the land escheats out from under him. I don't see how that could work. It seems more likely that the actual event on non-payment for 20 years or more is a potential claim of adverse possession on the part of the tenant against the fee owner. The state wouldn't have any standing in such a matter.
Properties with ground rents require two separate title searches: a title search relating to the ground rent and a title search relating to the property. The Archives has been able to establish the chain of title to the ground rents from the current ground rent claimant back to the original ground rent. Establishing this chain of title required us to consult the Baltimore City Block Books, the Grantee/Grantor Indices for Baltimore City and Baltimore County, Baltimore City and Baltimore County Land Records, Baltimore City Circuit Court Equity Docket and Case Files, Chancery Court Case Files, Baltimore City Register of Wills Inventories and Wills, Sanborn insurance maps, Baltimore City Directories, and the files of a private surveying firm in Baltimore City. The chain of title for this ground rent is available on this CD, as well as the inventory from Baltimore City Register of Wills that allowed us to link the chain of title from the current claimant back to 1849. Note that the inventory provided an incorrect reference to the prior deed, which we had to look up separately in the Grantee/Grantor Indices. To date, we have not yet been able to determine the chain of title on the sub-rents for this property and who, if anyone, can claim the sub-rents.
For the original leases and sub-leases to 122-124 East Churchill Street, see Baltimore County Court Land Records AWB 423, pp. 439-444 and AWB 424, pp. 352-357, which are available on http://mdlandrec.net, as well as on this CD.
In attempting to determine the chain of title to both the ground rent
and the tenant's interest in the 122-124 East Churchill Street property,
survey records in the Archives Special Collections (avalable for reference
only; copyright held by the donors), and published maps proved helpful.
See the Sanborn insurance map showing
this property in 1879. Note that the address for 122-124 East Churchill
Street on this map may be 25 Little Church Street. See also the subsequent
Sanborn maps to 1914 which provide the current addresses:
At your request, we are providing copies of an original ground rent lease and the immediately following sub-ground rent lease (both handwritten 99 year leases renewable) to demonstrate the complexity and difficulty of doing research on the topic and to give those at the hearing an idea of what the original record looks like. I have also included copies of Professor Garrett Power's excellent two articles on the early history of ground rents in Baltimore City.
The example we have provided is for a piece of property near Federal Hill that, after great effort, is traceable back to one of the largest holders and creators of ground rents in Baltimore City, John Eager Howard.
I have not had an opportunity to review all the pending legislation, but I would hope that two issues would be clarified and resolved:
1) as Professor Power points out:
Under Section 8-107 Limitation of Actions of the Real Property article of the Annotated Code of Maryland "if there has been no demand or payment for more than 20 consecutive years" of any ground rent , the original ground lease is extinguished and the leaseholder (AKA tenant, lessee ) takes fee simple title to the property.
See Safe Deposit & Trust Co. v. Marburg, 110 Md 410 (1909).
In the example where there had been an intervening sublease (while the original ground lease was still in effect) that sublease would not be extinguished unless and until the subrent went undemanded and unpaid for 20 years. It would seem to me to be a simple matter to require anyone claiming a ground rent to prove that they indeed have title to the ground rent by providing a chain of title back to the original lease (such as the lease we are providing you as an example). That title search/proof could be registered anywhere (SDAT, for example), but should be recorded among the land records of the Circuit Court.
2) with the requirement that the proof of title be recorded and indexed among the land records, now that we have http://mdlandrec.net, a fee should go directly to the Archives as the ultimate repository of the land records for its long term electronic maintenance.
Prepared by Edward C. Papenfuse, Jennifer Hafner, and Kimberly Moreno, March 2, 2007; revised 2007/05/02