Thursday, June 24, 2010

Maryland Judge Grants Ground Rent Investors Class Action Status In Suit To Preserve Their Ability To Snatch Homes Over Miniscule Debts

In Anne Arundel County, Maryland, The Baltimore Sun reports:
  • From fat-cat Wall Street financiers to oil-polluting energy companies like BP, nobody induces public rage quite like the unprincipled speculator who makes huge profits by brazenly running roughshod over the average citizen. Such purveyors of greed and their wanton disregard for others are easily spotted but not so easily deterred — they usually come armed with lawyers.

  • Four years ago, two Baltimore Sun reporters identified this sort of behavior in a previously overlooked provision of ground rent, the arcane and loosely regulated system wherein homeowners lease the land on which their houses are built. To collect overdue rental payments of as little as $24, some ground rent holders were seizing properties, selling them off and receiving the full proceeds, sometimes in the tens of thousands of dollars.(1)


  • Three years ago, the General Assembly passed reforms that allow ground rent owners to collect the rent that is due to them — and even reasonable penalties where appropriate. It gives them the right to seek liens and seek foreclosure, if necessary. But if homes are sold for overdue rent, the law calls for them to be reimbursed only for back rent and expenses they are rightfully due, not for the obscene profits some collected in the past.

  • Last week, an Anne Arundel County judge ruled for purposes of a lawsuit that the interests of ground rent owners can be represented collectively. Now certified as a class, the plaintiffs can press their case that the three-year-old reforms caused their leases to be substantially devalued and unconstitutionally impinged on their contractual and private property rights. The lease owners are seeking hundreds of millions of dollars in compensation from taxpayers. The sheer audacity of the claim is a wonder to behold.

For more, see Ground rent redux (Ground rent owners are suing to preserve their ability to seize homes over miniscule debts).

For a related story on Maryland ground rent ripoffs, see:

(1) For The Baltimore Sun's December, 2006 series on the local legalized ground rent ripoff system used by some investors to seize homes or extract large fees from people who often are ignorant of the loosely regulated process, see On shaky ground (A Sun investigation into the secretive ground rent business in Baltimore).