Maryland reinstates ground rent remedy of ejectment and reentry.

On February 26, 2014 Maryland's Court of Appeals struck a statute that eliminated a ground rent owner's right of re-entry.  Maryland v. Goldberg is a slam dunk victory for ground rent owners of property consisting of four or less residential units. By this opinion written by Judge Harrell, they have reclaimed the right to eject delinquent tenants, and exercise their full reversionary interest in the real property.

This builds on the 2011 Muskin decision, which struck the legislature's effort to invoke mandatory ground rent registration. The failure to register would have caused complete forfeiture, or loss, of the ground rent owner's rights in the real property.

The owners of ground rents challenged the State of Maryland in the Circuit Court for Anne Arundel County, arguing that the most important aspect of a ground rent is the owner's right to reclaim the property if rent is not paid.  Just like your apartment, a ground rent owner has traditionally been able to evict a non-paying tenant, and reclaim the entire fee interest in the land. But in 2007, after a wave of bad publicity about evictions, Maryland's legislature passed a law that took away the ground rent owner's right to evict a tenant for failure to pay.

The owners of ground rents argued that that the right to re-enter and evict is a vested property right, and that the legislature violated some basic constitutional precepts by swapping this remedy for a system of liens.

Under Maryland's new statute, a ground rent owner was entitled only to impose a lien for unpaid ground rent.  And like any other lien, it could be foreclosed.  That meant the ground rent owner would get paid out of the fund created by the foreclosure sale. The Court of Appeals described it this way:

Shortly put, this process replaced ejectment with a lien-and-foreclosure sale. The, lien receives priority from the date the ground lease was created. The debt is paid from
the proceeds of the sale. If the ground lease is redeemable, the redemption amount is deducted also from the proceeds of the sale. If the ground lease is irredeemable, the foreclosure buyer takes subject to the ground lease.

The legislature had completely eviscerated the ground rent owner's right to take back the property upon the failure to pay rent. The trial court ruled against the State of Maryland, and in favor of the ground rent holders.

And the highest court stood firm. declaring that the right of re-entry and ejectment is a fundamental property right, fully vested and deserving of constitutional protection. This is a good thing for property rights, which have been eroded steadily by legislative action.

Do you own land with four or fewer residential units that is subject to annual or bi-annual ground rent? Are you buying or selling land subject to ground rents? Or are you an owner of a ground rent? The questions that will arise in your transactions go beyond the mere existence of a ground rent.  For example, what must be done with liens that have already been filed pursuant to the now invalid law? Can they still be foreclosed?

Your upcoming settlements and title claims just got a bit more interesting.

Save your boat! Contest that maritime lien in Maryland's District Court.

Your boat needs care and attention, even in tough times. But you may fall behind, or be unable to pay the bills for repairs, bottom painting, towage, slip fees or other necessaries. And as a tough economy has made it difficult to maintain your home mortgage and business expenses, maybe you've let bills for services to your boat go delinquent. So,imagine your shock and dismay when you receive a document several weeks later announcing that your boat will be put up for public auction, perhaps in as little as ten days. YOUR BOAT!!  Sold at auction in ten days!

Or maybe you've already received a notice?

Your mind will fill with questions---How do I contest the lien? Can I get my boat back? What can be done to stop the auction?

 

Only preferred ship mortgage liens must be filed with the USCG National Vessel Documentation Center. All others may be filed, but are not required to be registered. Maryland law operates to impose a lien on your boat whenever someone is hired to provide services or materials to maintain, run, or repair the vessel. Nothing has to be filed, the lien just exists if the service or material is provided and you fail to pay. This is very different from liens on land and houses, which arise from items recorded in land records and the courthouse.  Maryland's land records system has no companion "sea records" recording system.

Your boat can be subject to liens for state and federal taxes, UCC filings, storage, repairs, supplies, crew wages, salvage, and fuel.  In one famous old case, a very large vessel was subject to a maritime lien for a case of the Captain's wine!

Different types of liens have different statutes of limitations.  Some are as short as six months, or two years.  And some become unenforceable if a third-party buys your boat without notice of a pending lien. 

But if you continue to own your boat, you remain at risk. And you may someday receive a notice that declares YOUR BOAT will be auctioned within ten days. That's right, if you miss the notices published in the newspapers, your first notice of the potential auction of YOUR BOAT may be no later than ten days before the auction!

Fortunately, the Maryland Court Rules contains a powerful tool to stop the slide to lien foreclosure sale.  It is called Replevin.

You regain control by filing a replevin action in the District Court of Maryland. It doesn't matter how big or small your boat may be, the District Court has jurisdiction over all replevin cases.  A properly filed replevin case forces a hearing, usually within three weeks of filing the papers, to determine what can be done with the vessel pending trial. You may have to post some sort of security, but you can get control of your boat!

The case will then be set for a trial.  You will then have the opportunity to contest the basis for the lien, such as whether the goods and services were actually provided, or were provided in good order. 

And, as with all court cases, the passage of time and a schedule of events will provide many opportunities for you to settle the claim in a way that keeps you cruising or working the Chesapeake Bay!

And that's the "hull" truth.