Section 8-402.3 - Lien for nonpayment of ground rent.
§ 8-402.3. Lien for nonpayment of ground rent.
(a) Definitions.-
(1) In this section the following words have the meanings indicated.
(2) "Ground lease" means a residential lease or sublease for a term of years renewable forever subject to the payment of a periodic ground rent.
(3) (i) "Ground lease holder" means the holder of the reversionary interest under a ground lease.
(ii) "Ground lease holder" includes an agent of the ground lease holder.
(4) "Ground rent" means a rent issuing out of, or collectible in connection with, the reversionary interest under a ground lease.
(5) "Leasehold interest" means the tenancy in real property created under a ground lease.
(6) "Leasehold tenant" means the holder of the leasehold interest under a ground lease.
(7) "Property" means property subject to a ground lease against which a lien is intended to be imposed under this section.
(b) Applicability.-
(1) This section applies to residential property that is or was used, intended to be used, or authorized to be used for four or fewer dwelling units.
(2) This section does not apply to property:
(i) Leased for business, commercial, manufacturing, mercantile, or industrial purposes, or any other purpose that is not primarily residential;
(ii) Improved or to be improved by any apartment, condominium, cooperative, or other building for multifamily use of greater than four dwelling units; or
(iii) Leased for dwellings or mobile homes that are erected or placed in a mobile home development or mobile home park.
(c) Remedies.-
(1) Notwithstanding any provision of a ground lease giving the ground lease holder the right to reenter, the establishment of a lien under this section is the remedy for nonpayment of a ground rent.
(2) This section does not affect the right of a ground lease holder to bring a civil action against the leasehold tenant seeking a money judgment for the amount of the past due ground rent.
(d) When lien may be obtained.- Subject to §§ 8-111 and 8-111.1 of this title, if a ground rent is unpaid 6 months after its due date, the ground lease holder may obtain a lien under this section in the amount of the ground rent due.
(e) Notice.-
(1) A ground lease holder seeking to create a lien under this section shall give written notice to:
(i) The leasehold tenant; and
(ii) Each mortgagee or trustee of the property whose lien is on record.
(2) (i) Notice under this subsection shall be served on the leasehold tenant by:
1. Certified mail, return receipt requested, addressed to the leasehold tenant or the leasehold tenant's successor in interest at the individual's current address; or
2. Personal delivery to the leasehold tenant or the leasehold tenant's successor in interest.
(ii) If the ground lease holder is unable to serve the leasehold tenant under subparagraph (i) of this paragraph, notice under this subsection shall be given by:
1. Mailing the notice to the leasehold tenant's last known address; and
2. Posting the notice in a conspicuous manner on the property on the door or other front part of the property by the ground lease holder in the presence of a competent witness.
(iii) Notice to any mortgagee or trustee under this subsection shall be given by sending the notice by certified and first-class mail to the most current address for notices as set forth in the land records or, if no such address is contained in the land records, to the mortgagee's or trustee's current address.
(3) A notice under this subsection shall include:
(i) The name and address of the party seeking to create the lien;
(ii) A statement of intent to create a lien;
(iii) An identification of the ground lease;
(iv) The amount of ground rent alleged to be due;
(v) A description of the property sufficient to identify the property;
(vi) A statement that the party to whom notice is given under this subsection has the right to object to the establishment of a lien by filing a complaint in the circuit court and the right to a hearing;
(vii) An explanation of the procedure to file a complaint and request a hearing; and
(viii) A statement that, unless the past due ground rent is paid or a complaint is filed under subsection (f) of this section within 45 days after the notice is served, a lien will be imposed on the property.
(f) Complaint.-
(1) A party to whom notice is given under subsection (e) of this section may, within 45 days after the notice is served on the party, file a complaint in the circuit court for the county in which the property is located to determine whether a lien should be established.
(2) A complaint filed under this subsection shall include:
(i) The name of the complainant and the name of the party seeking to establish the lien;
(ii) A copy of the notice served under subsection (e) of this section; and
(iii) An affidavit containing a statement of facts that would preclude establishment of the lien for the unpaid ground rent alleged in the notice.
(3) A party filing a complaint under this subsection may request a hearing at which any party may appear to present evidence.
(g) Complaint - Burden of proof.- If a complaint is filed, the party seeking to establish the lien has the burden of proof.
(h) Supplemental information.- Before any hearing held under subsection (f) of this section, the party seeking to establish a lien may supplement, by means of an affidavit, any information contained in the notice given under subsection (e) of this section.
(i) Review and hearing.- If a complaint is filed under subsection (f) of this section, the court shall review any pleadings filed, including any supplementary affidavit filed under subsection (h) of this section, and shall conduct a hearing if requested under subsection (f)(3) of this section.
(j) Order.-
(1) If the court determines that a lien should be established, it shall enter an order finding the amount of ground rent due and imposing a lien on the property identified in the notice under subsection (e) of this section.
(2) If the court determines that a lien should not be established, it shall enter an order denying a lien.
(3) The court may award to the prevailing party in an action under this section:
(i) Court costs; and
(ii) Reasonable expenses and attorney's fees not exceeding $500.
(k) Amount of lien.-
(1) (i) If a complaint was filed under subsection (f) of this section, the amount of the lien shall be for the ground rent found by the court to be due and any costs, expenses, and attorney's fees awarded by the court.
(ii) If a complaint was not filed under subsection (f) of this section and the past due ground rent was not paid, the amount of the lien shall be for the amount alleged to be due in the notice under subsection (e) of this section and reasonable expenses and attorney's fees not exceeding $150.
(2) The amount of the lien shall increase by the amount of ground rent accruing after the filing of the statement of lien in the land records plus simple interest at the rate prescribed by law accruing from the date of the filing of the statement of lien in the land records.
(l) Statement of lien.-
(1) If the court orders a lien to be imposed under subsection (j) of this section, or if the leasehold tenant or any mortgagee of the property fails to pay the amount of the lien under subsection (k)(1)(ii) of this section or file a complaint under subsection (f) of this section, the ground lease holder may file a statement of lien in the land records of the county in which the property is located.
(2) A lien imposed under this subtitle has priority from the date the ground lease was created.
(m) Statement of lien - Form.- A statement of lien is sufficient for purposes of this section if it is in substantially the following form:
"STATEMENT OF LIEN
This is to certify that the property described as ________ is subject to a lien under § 8-402.3 of the Real Property Article, Annotated Code of Maryland, in the amount of $________. The property is owned by ____________.
I hereby affirm under the penalty of perjury that notice was given under § 8-402.3(e) of the Real Property Article on ________, and that the information contained in the foregoing statement of lien is true and correct to the best of my knowledge, information, and belief.
____________________________________________________________
(name of party claiming lien)".
(n) Enforcement and foreclosure.-
(1) A lien under this section may be enforced and foreclosed by the party who obtained the lien in the same manner and subject to the same requirements, as the foreclosure of a mortgage or deed of trust containing neither a power of sale nor an assent to decree.
(2) A foreclosure sale may not be made if, at any time before the sale, the lien is satisfied and the costs of giving notice of the sale are paid.
(3) If the property subject to the lien is sold at a foreclosure sale, the ground lease holder shall be paid out of the proceeds of the sale:
(i) For a redeemable ground rent, the amount of the lien and the redemption amount under § 8-110(b)(2) of this title and the purchaser shall take title to the property free and clear of the ground lease; and
(ii) For an irredeemable ground rent, the amount of the lien and the purchaser shall take title to the property subject to the ground lease.
(o) Satisfaction of lien when lienholder cannot be located.- If the lienholder cannot be located, the lien may be satisfied and the redeemable ground rent redeemed in accordance with § 8-110(f) of this title by paying the amount of the lien and the amount set forth in § 8-110(f)(4) of this title.
[2007, ch. 5, § 7; ch. 285; ch. 286, § 1; 2008, ch. 36, § 6; 2009, ch. 60, § 5.]