Ground Rent Redemption
The Ground Rent Redemption Loan Program provides interest-free loans to help Maryland homeowners buy out (redeem) the ground lease on their property.
- A "ground lease" is a lease for a term of years (usually 99 years) that is renewable forever and is subject to the periodic payment of "ground rent" by the leasehold tenant to the ground lease holder.
- Ground rents are most prevalent in Baltimore City but are held in some other counties as well. The program cannot provide grants for this purpose.
Eligibility
To qualify for a Ground Rent Redemption loan, you must meet the following requirements:
- You must own the property.
- The property must be your primary residence.
- You must be current on any past ground rent payments.
- Your total household income cannot exceed 80% of the Statewide median income.
Check the current income limits for your household size - PDF - 101.23 KB
Required documents to apply:
- Completed loan application
- Proof of property ownership
- A copy of the recorded document showing your ground rent
- Documentation of your total household income
Loan Terms
- Interest Rate: 0% (Interest-free)
- Loan Term: 30 years
- Property Lien: A lien will be recorded against your property for the loan amount.
Note: This program does not provide grants for ground rent buy outs.
Loan amount
The maximum loan amount is $3,500. This includes up to $1,000 for transactional costs (such as title searches and loan closing fees).
You are free to choose any qualified title company to handle your title search and loan closing.
Examples of how the loan works:
- Scenario A (fully covered): Your ground rent buy out is $800 and your transactional costs are $500. Total cost = $1,300. Your loan covers the full $1,300.
- Scenario B - over loan total: Your ground rent buy out is $2,500 and transactional costs are $1,100. Total cost = $3,600. Your loan covers $3,500, and you pay the remaining $100.
- Scenario C - over transactional cost: Your ground rent buy out is $1,500 and transactional costs are $1,100. Because the max amount for transactional cost is at $1,000, your loan covers $2,500, and you pay the extra $100 in closing costs.
How is the buy out calculated?
The state fixes the purchase price (redemption amount) of a ground lease by dividing your annual ground rent fee by a "capitalization rate." This rate is based on the year the ground rent was established.
Date of Original Lease | Capitalization Rate |
|---|---|
April 8, 1884 to April 5, 1888 | .04 |
April 6, 1888 to July 1, 1982 | .06 |
July 2, 1982 or later | .12 |
Prior to April 8, 1884 | May have been established as “Irredeemable” |
Note: Some ground leases were originally labeled as “irredeemable,” meaning they could never be bought out. Maryland law requires the ground lease holder to file a Notice of Intention to Preserve Irredeemability in the land records every 10 years. If no notice is filed, or if a filed notice expires without renewal, the ground rent becomes redeemable.
Ready to Apply?
Submit the completed application by:
- Email: [email protected]
- Or, mail: CDA Special Loan Programs
7800 Harkins Road, 3rd Floor, Lanham, MD 20706