Ground rent
From Wikipedia, the free encyclopedia
A ground rent is a form of lease in which unimproved land is leased for a long term for purposes of improvement by the tenant.
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[edit] Laws
In Roman law, ground rent (solarium) was an annual rent payable by the lessee of a superficies or perpetual lease of building land.
[edit] English
In English law, it appears that the term was at one time popularly used for the houses and lands out of which ground rents issue as well as for the rents themselves (cf. Maundy v. Maundy, 2 Strange, 1020). Lord Eldon observed in 1815 that the context in which the term occurred may materially vary its meaning (Stewart v. Alliston, I Mer. 26).
The contemporary accepted meaning of ground rent is the rent at which land is let for the purpose of improvement by building; i.e., a rent charged in respect of the land only and not in respect of the buildings to be placed thereon. It thus conveys the idea of something lower than a rack rent; and accordingly if a vendor described property as property for which he paid a ground rent, without any further explanation of the term, a purchaser would not be obliged to accept the property if it turned out to be held at a rack rent. But while a rack rent is generally higher in amount than a ground rent, the latter is usually better secured, as it carries with it the reversionary interest in buildings and improvements put on the ground after the date at which the ground rent was fixed, and accordingly ground rents have been regarded as a good investment. Trustees empowered to invest money on the security of freehold or copyhold hereditaments, may invest upon freehold ground rents reserved out of house property. In estimating the amount that may be so invested, account may be taken of the value of the houses, as, if the ground rents are not paid, the landlord can re-enter. Again, where a settlement authorizes trustees to purchase lands or hereditaments in fee simple or possession, a purchase of freehold ground rents has been held to be proper.
A devise of ground rent carries not only the rent but the reversion. Where a tenant is compelled, in order to protect himself in the enjoyment of the land in respect of which his rent is payable, to pay ground rent to a superior landlord (who is of course in a position to distrain on him for it), he is considered as having been authorized by his immediate landlord to apply his rent, due or accruing due, in this manner, and the payment of the ground rent will be held to be payment of the rent itself or part of it.
The Commonhold and Leasehold Reform Act 2002 and the The Landlord and Tenant (Notice of Rent) (England) Regulations 2004 now govern the form of notice that needs to be issued to collect ground rent. Previously there had been a problem with some landlords sending confusing or dishonest demands for payments to tenants.
[edit] Scottish
In Scots law, the term ground rent is not employed, but its place is taken, for practical purposes, by the ground-annual, which bears a double meaning. (i.) At the time of the Reformation in Scotland, the lands of the Church were parcelled out by the crown into various lordships, the grantees being called Lords of Erection. In the 17th century these Lords of Erection resigned their superiorities to the crown, with the exception of the feu-duties, which were to be retained till a price agreed upon for their redemption had been paid. This reserved power of redemption was, however, resigned by the crown on the eve of the Union and the feu-duties became payable in perpetuity to the Lords of Erection as a ground-annual. (ii.) Speculators in building ground usually grant sub-feus to builders at a high feu-duty. But where sub-feus are prohibited—as they might be, prior to the Conveyancing (Scotland) Act 1874—and there is much demand for building ground, the feuars frequently stipulate for an annual rent from the builders rather than for a price payable at once. This annual rent is called a ground-annual. Interest is not due on arrears of ground-annuals. Like other real burdens, ground-annuals may now be freely assigned and conveyed.
[edit] American
The term ground rent in the English sense does not seem to be generally used in the United States, but is applied in Pennsylvania 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 of 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 such 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.
A ground rent being a freehold estate, created by deed and perpetual in duration, no presumption could, at common law, arise from lapse of time, that it had been released. But, by statute (Act of 27th of 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 acknowledgement 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, 22nd of April 1850).
Ground rents are also found in some portions of Maryland, primarily in the Baltimore area. These are typically 99-year leases, renewable in perpetuity, subject to a semi-annual rent payment. Under Maryland law, the tenant of a residential property has the right to redeem the ground rent for a one-time payment and obtain full title to the property. If the renter does not pay, the ground rent holder can go to court and have the tenant evicted or ejected over as little as $30-$300, which can take place immediately. The owner can then resell it for full profit, and the former owner does not get anything from the deal. Due to these circumstances, an emergency bill is being presented by Maryland governor, democrat Martin O'Malley, to completely ban new ground rents in Maryland.
[edit] External Links
[1] Special Baltimore Sun Series on Ground Rent in Baltimore City
[edit] References
- For English Law see Foa, Landlord and Tenant (3rd ed., London, 1901)
- Scots Law, Bells Principles (10th ed. Edinburgh, 1899)
- American Law, Bouvier, Law Dict. (Boston and London, 1897).
This article incorporates text from the Encyclopædia Britannica Eleventh Edition, a publication now in the public domain.
- "Mystery of ground rents is solved with a few facts". (August 19, 2001). Baltimore Sun, p. 3L.
- "End ground rent evictions, O'Malley says". (February 1, 2007). Baltimore Sun.
