I've intended to post this for the last week. Shame on me, but the house has needed a new coat of paint!
The challenge to Maryland's ground rent registration law has finally percolated to the Court of Appeals in the case captioned Muskin v. State Department of Assessments and Taxation. It was argued on June 6, 2011 (one day before I argued the much sexier "curative act" case, with my friends Betsy Nowinski and Tim Maloney). You may watch the video of the entire argument (it is case #140) or you can read a very good summary of the arguments published in the Baltimore Sun.
I spend a lot of my professional time wading in the big pool of title disputes. Many claims and cases involve ground rents, absent ground rent owners, and ground rent foreclosures. I have lectured on this subject to clients located in several states, and I remain ambivelent about this statute. On the one hand, I know how difficult it is for regular folks to locate a "true" ground rent owner. The lack of a meaningful database has crippled many residentail real estate transactions, and has caused heartburn for many purchaser/sellers that only wanted to do the right thing. Unpaid ground rent has triggered hundreds of title insurance claims, which has been good for business, but not so good for the parties, title agents, closing officers or the courts involved.
But I get stuck on the confiscatory nature of the statute. The State argued that it is merely prospective, giving ground rent owners three years to register, and thus does not constitute a "taking" that must be compensated. I just don't see it. Regardless of a ground rent owner's choice to register, he still loses a real and tangible property right- the reversion. Converting that right to something akin to a contract for a periodic payment just does not sit well with me.
