DOCSLIB.ORG

Ground Leases and Leasehold Interests in CMBS: When the Value of the Parts Doesn't Equal the Whole

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Ground Leases and Leasehold Interests in CMBS: When the Value of the Parts Doesn't Equal the Whole Commentary FEBRUARY 10, 2021 Ground Leases and Leasehold Interests in CMBS: When the Value of the Parts Doesn't Equal the Whole Kurt Pollem The Chrysler Building has been an iconic pres- the way. The investment seemed to be a great Managing Director ence in the New York skyline since the 1930s success, and it was for a while. However, the North American CMBS when its distinctive Art Deco dome and spire ground-lease agreement contained a rent +1 212 548-6394 rose up into the sky. But the story of this Mid- clause prevalent in New York City that allows kurt.pollem@dbrsmorningstar.com town office tower ownership highlights certain for a market-based reset over a longer period important risks regarding the economics of the to account for possible appreciation catch-ups. Steve Jellinek ground lease contract between ground lessor There was a big problem, though. The older Vice President – Head of Research and ground lessee. It also raises the question of floorplates and infrastructure of the building North American CMBS what happens if, for any number of reasons, a were becoming less desirable to tenants. The + 1 312 244-7908 property’s leasehold improvements cannot bear increasing ground rent payment began to steven.jellinek@dbrsmorningstar.com the burden of ground lease rent payments that overwhelm the property’s revenue as the aging only increase over the typically very long period building’s occupancy and rental rates continued Erin Stafford stipulated in such agreements. to lag much newer properties. Managing Director Global Structured Finance The Chrysler Building was constructed on land In 2008, Tishman sold a 90% interest in the +1 312 332-3291 owned by the Cooper Union school, which building to the Abu Dhabi Investment Council erin.stafford@dbrsmorningstar.com entered into a long-term ground lease with the for $800 million, or $667 per square foot (psf). developer and as ground lessor, has enjoyed a Then in 2018, the market-value-based ground steadily increasing income stream of ground- rent reset provision triggered a more than 300% lease payments ever since. By 1998, however, increase in the annual lease payment, as it occupancy had stagnated under previous shot up to $32.5 million from $7.5 million the ownership. The once majestic office tower was prior year at a time when the property’s rental in need of repair and the Japanese lenders income was dropping. Per Reis, the Chrys- wanted to sell the defaulted leasehold mort- ler Building’s 2019 average asking rent and gage they had made on the famous property. vacancy were $66.31 psf and 18.5%, respec- Tishman Speyer (Tishman) and Travelers were tively, compared with the 2019 New York Metro the winning bidders, in part because Jerry average asking rent and vacancy of $75.26 psf Speyer himself reportedly negotiated a more and 8.2%. When Tishman and Abu Dhabi sold economical 150-year ground lease with Cooper the building in 2019 to RFR Realty LLC (RFR) for Union beforehand and took over the leasehold a mere $150 million, it stunned the commercial interest. The new owners believed that after real estate world. The price equated to just $100 million in capital improvements, leasing $125 psf, indicating that the leasehold and the would improve and tenant lease revenue would existing improvements were of very little value, easily cover the future ground-lease payments. even for an iconic landmark. Now the question remains: Will RFR be able to negotiate a new Under Tishman Speyer’s leadership, the repairs ground-lease agreement like Jerry Speyer did were made and the Chrysler Building once in 1998? If not, the investment in the leasehold again leased up and increased in value along interest could be destined for failure once again. 1 DBRS Morningstar Ground Leases and Leasehold Interests in CMBS: When the Value of the Parts Doesn't Equal the Whole Commentary $35 million Bifurcating the Fee and Leasehold Interests So what has changed? Land value in New equity Ground lease arrangements have existed York City, for example, continued its steep rise. contribution for centuries in real estate. The typical Property owners and financing agents saw more $100 million purchase ground lease results in two distinct legal opportunities to unlock that increased value by price estates: the ground lessor’s fee interest in bifurcating the fee and leasehold interests and 6% going -in the underlying land and the ground lessee’s financing both interests. Real estate investors cap rate $65.0 million leasehold interest in the improvements. seeking acquisitions sought to split off and sell loan $14.5 million equity These two estates, subject to the terms of the ground fee interest to lower their equity con- 65% LTV fee $49.2 million simple value; the ground lease, can then be separately tribution and increase their cash-on-cash returns 9.2% debt $32.0 million owned and financed. In the normal course, retaining the leasehold and financing it as well. yield Leasehold loan Value the ground lessor enjoys a highly predict- 65% LTV to able and generally well-secured payment But there is a catch, of course. The ground- 8% cap rate leasehold stream sometimes for as long as 100 or lease agreement is long, the ground rent value; 12.3% Hypothetical debt yield more years. The ground lessee owns a payment keeps going up, and property revenue Financing leasehold and is left to focus on operating also needs to keep pace with this increase. To better illustrate $53.5 million ground lease sale the real estate improvements, while often Thus, the transaction parties must be confident this, we’ll present benefiting from favorable tax and deprecia- that tenant rents will also grow over time and 5.75% yield on 99-year ground a hypothetical rent payment schedule; 3.9% tion treatment. For the most part, ground- that the property will remain attractive to financing: going-in cap rate lease payments were a modest portion of future tenants. Otherwise, the ground rent the leasehold owner’s operating expense burden on the leasehold interest begins to A real estate investor spots an opportunity to burden and a safe, reliable income stream creep up. Moreover, the leasehold interest, the purchase an office campus in a second-tier market. for the landowner. Up until recently, it was term of which is finite, is viewed as a wasting Based on the property’s current net cash flow (NCF) difficult to find examples of a ground lessee asset that becomes worthless when occupancy and assumed capitalization rate of 6%, the investor defaulting on a payment to the lessor. After rights revert to the leased fee holder at the will pay $100 million to purchase the property. And, all, the consequences are extreme. If the termination of the ground lease. As shown in based on prevailing lending conditions, we assume ground lessee defaults, ground lessors can the graph below, there is significant equity the purchaser qualifies for a mortgage loan at 65% of terminate the ground lease, extinguish the erosion in the leasehold interest compared the purchase price, leaving $35 million to be funded ground lease estate, evict the ground lessee, with a fee-simple interest over an assumed through cash equity. However, the investor believes and take back the property improvements. 50-year ground lease term. In this example, it can split off the ground fee interest and sell it to If the leasehold interest is financed, the we assumed a 2% annual growth rate in NCF a third party subject to a long-term ground-lease leasehold lender has similar risks in a to match the 2% annual ground-lease rent agreement where the property is leased back to the default situation. If the leasehold interest is increase. The leasehold interest value begins original investor. This enables the original investor terminated, the leasehold lender risks losing to deteriorate with 20 years remaining on the to continue to operate the property but also gain an its collateral entirely. Of course, leasehold lease. With only 10 years remaining, the value immediate return from the sale to the third-party loans and associated ground leases (to be begins to decline much more rapidly. As a investor, which can defray its equity requirements. financeable) are generally structured to give result, if a leasehold loan on a property subject Depending on the economics and property quality, the leasehold lender remedies in this situ- to a ground lease needs to be refinanced with the leasehold financing can be a superior alternative. ation, including rights to cure any defaults only 20 years remaining on the ground lease, In this example, assuming a 99-year ground-lease and effectively step into the shoes of the the expected valuation decline can make this term and beginning ground-lease payment of around leasehold borrower. exceptionally difficult. 20% of the property’s effective gross income (EGI), the purchaser is able to sell the ground-lease interest EXHIBIT 1 for $53.5 million at a 5.75% yield to the buyer (i.e., the Equity Erosion discount rate applied to the 99 years of ground-lease payment cash flow to arrive at the net present value purchase price). That leaves the original investor needing only to obtain the leasehold financing. Even at a greatly reduced loan amount on the leasehold Equit Erosion interest, the purchaser is contributing significantly less cash equity to buy the property while enjoying much higher returns over an assumed 10-year holding period. In this example, we assume a $32 million loan on the leasehold interest. When combined with the ground-lease sale, the borrower ends up contributing 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 less than half the equity of a fee-simple financing.
Load more

Recommended publications
  • Convey 04 Eug. Amend 06 Aug. Final
    LAW SOCIETY CONVEYANCING HANDBOOK CHAPTER 4 LANDLORD AND TENANT LEASES OF meeting of the solicitors acting for Lending Institutions in Dublin has considered the DWELLINGHOUSES Aeffect of Section 2 of the Landlord and Tenant (Ground Rents) (No. 1) Bill 1977, having regard to the practice of leases of dwellinghouses on building estates being executed 1978 (NO.1) ACT by all parties well in advance of the completion of the houses, and being held in escrow by the lessor’s solicitors, usually to enable stamp duty on the lease to be assessed and impressed prior to completion. It was the unanimous view of the solicitors present that such a lease even though dated prior to the date of coming into force of the Act would be void under the Act if it were held in escrow at the date of the passing of the Act and then delivered to the purchasers afterwards. The meeting further considered the difficulties which would face a Lending Institution’s solicitor presented, shortly after the passing of the Act, with a lease dated prior to the date of passing of the Act, of deciding whether such a lease were void because it had been held in escrow or valid because it had been delivered prior to the passing of the Act. The view of the meeting was that a Lending Institution solicitor could not undertake the burden of making such a decision. The meeting noted that the provisions of Section 2, Sub-section (4) of the Bill which protected the position of a purchaser of a leasehold interest deemed void under Section 2, Sub-section (1), did not extend to a mortgagee and accordingly agreed that the solicitors acting for Lending Institutions would not be able to accept leases of dwellinghouses after the date of coming into force of the Act even though the leases might have been dated prior to the passing of the Act.
    [Show full text]
  • Ground Rents in Maryland;
    A-\ GROUND RENTS IN MARYLAND; WITH AN INTRODUCTION CONCERNING THE TENURE OF LAND UNDER THE PROPRIETARY. BY LEWIS MAYER, Of the Baltimore Bar. WITH AN ARTICLE ON MANORS IN MARYLAND BY JOHN JOHNSON, [K. AND THE RECORD OF THE COURT-BARON AND COURT- LEET OF ST. CLEMENT'S MANOR, REPRINTED FROM THE PUBLICATIONS OF THE JOHNS HOPKINS UNIVERSITY. U ALTI MORE: CUSHINGS & BAILEY. 1883. Entered according to Act of Congress in the year 1883,by OTSHIN&S & BAILEY, in the office of the Librarian of Congress at Washington. PBESS OF ISAAC FEIEPHNWALD, BALTIMORE, ID. PREFACE. A treatise on Ground Rents in Maryland, a form of investment peculiar to this State, and which is now attracting a good deal of attention, it was thought, might prove acceptable to lawyers, students of law, investigators of local institutions, and to those who, from a business point of view or otherwise, might be interested in the matter. The undersigned has accordingly written this little book, in the hope that it may serve its purpose of fur- nishing definite information on the subject in question. As speculation on the origins of all things is now in vogue, an undertaking of this sort would be incom- plete, if it did not offer some suggestions as to the origin of our system of ground rents. It was, there- fore, necessary to make Lord Baltimore's Charter the starting point of the historico-legal portion of the work. From that instrument the tenure of land under the Proprietary is traced and explained; the evolution of ground rents out of that tenure is then shown, and reasons are assigned why they happened to assume their present form.
    [Show full text]
  • Recent Developments in Maryland's Intestate Succession Law
    University of Baltimore Law Forum Volume 13 Article 9 Number 1 Fall 1982 1982 Recent Developments in Maryland's Intestate Succession Law Follow this and additional works at: http://scholarworks.law.ubalt.edu/lf Part of the Law Commons Recommended Citation (1982) "Recent Developments in Maryland's Intestate Succession Law," University of Baltimore Law Forum: Vol. 13: No. 1, Article 9. Available at: http://scholarworks.law.ubalt.edu/lf/vol13/iss1/9 This Article is brought to you for free and open access by ScholarWorks@University of Baltimore School of Law. It has been accepted for inclusion in University of Baltimore Law Forum by an authorized administrator of ScholarWorks@University of Baltimore School of Law. For more information, please contact snolan@ubalt.edu. FORUM In so doing, the court indulged in Additionally, to best effectuate the a lengthy review of the statutory imposition of its holding, the court Recent history of MPDA and of the pre- adopted an interpretation of the term vailing doctrines which other states "acquired" appearing in § 3-6A- Developments in with similar statutes have employed 01(e) as: Maryland's Intestate in enforcing those statutes. While The on-going process of mak- stressing the importance of protect- ing payment for property. Tib- Succession Law ing the interests of spouses who had bets, 406 A.2d at 77. Under this made monetary and nonmonetary definition, characterization of contribution to the marital unit and nonmarital or marital property The 1982 amendment to Md. Est. residence, the court considered and depends upon the source of & Trusts Code Ann. § 3-102 (1974), rejected two competing theories each contribution as payments is a welcome change to Maryland's adopted by a majority of its sister are made, rather than at the time jurisdictions: (1) the "inception of intestate succession law.
    [Show full text]
  • Pitfalls to Avoid
    LEASE CONFERENCES Audio for the webinar will For technical assistance be through your computer please call Webex: speakers • 0800 389 9772 • Option 3 Audio also available by • Quote site reference: lease-advice.webex.com telephone: Submit questions via the Free phone 0800 051 3810 Other +44 20 3478 5289 chat box Access code: 957 632 356# www.lease-advice.org Page 2 Disclaimer Whilst we make reasonable efforts to ensure it is accurate and up–to–date, information and guidance in this webinar does not and is not intended to amount to legal advice in any particular case No responsibility for any consequence of relying upon the webinar material or presentations of the webinar is assumed by LEASE or any of our advisers The law as stated during this webinar is up to date as of 15 October 2013 www.lease-advice.org Residential Leasehold Conveyancing Pitfalls to Avoid Thomas Frith 15th October 2013 LEASE Conferences October 2013 1 www.lease-advice.org Page 4 Content • What the seller should do before marketing the property • What the buyer needs to be aware of before making an offer • Progress of a conveyance • Completion and post completion www.lease-advice.org Page 5 What should the seller do Keep all documentation relating to the property in a secure location, especially the following • Copy of the lease • The report on lease and title provided by the conveyancer on the purchase • All service charge demands and receipts • All ground rent demands and receipts • Any correspondence from the landlord/managing agent, especially any Section 20 consultation notices • Any electrical installation certificate for works undertaken Obtain an Energy Performance Certificate www.lease-advice.org Page 6 The lease Ensure you have a copy of the lease and any head lease.
    [Show full text]
  • Policy Paper on Tax Reform (Pdf)
    CSI Policy Study Civil Society Institute • Santa Clara University 500 El Camino Real • Santa Clara, CA 95053 • csi@scu.edu • 408/554-6931 January 2006 The Ultimate Tax Reform: Public Revenue from Land Rent by Fred E. Foldvary** The U.S. tax system is widely perceived as too complex, too intrusive, and too demanding of workers’ paychecks. Taxes today claim a greater share of the average family’s budget than food, clothing, housing, and transportation combined.1 In 2005, the average American had to work 107 days just to pay taxes, compared to 44 days in 1930.2 Tax reform proposals, not surprisingly, are popular among voters and the politicians who If land value is taxed, the land will not represent them. President George W. Bush flee, shrink, or hide. A tax on land created an advisory panel on tax reform. value has no deadweight loss. Some economists and institutes have proposed reforms to flatten and simplify the income tax, or to replace it entirely with a national sales or consumption tax or value-added tax. These would be an improvement, but if we seek to reform taxes, we should consider all the possibilities and choose, as Milton Friedman puts it, the “least bad” tax. Even a relatively flat income tax imposes what economists call a “deadweight loss” or “excess burden” on society. Taxes on productive activity increase the price of labor or goods beyond economic costs, and so reduce the quantity provided. This reduction in production, income, and * Fred Foldvary received his Ph.D. in economics from George Mason University in Virginia.
    [Show full text]
  • Collecting Land Value Through Public Land Leasing 123 John E
    Value Capture and Land Policies Edited by Gregory K. Ingram and Yu-Hung Hong © 2012 by the Lincoln Institute of Land Policy All rights reserved. Library of Congress Cataloging-in-Publication Data Value capture and land policies / edited by Gregory K. Ingram and Yu-Hung Hong. p. cm. Includes bibliographical references and index. ISBN 978-1-55844-227-6 1. Public lands—Valuation. 2. Real estate development— Finance. 3. Land use, Urban. 4. Public investments. I. Ingram, Gregory K. II. Hong, Yu-Hung. HD216.V33 2012 333.10973—dc23 2012008363 Designed by Vern Associates Composed in Sabon by Achorn International in Bolton, Massachusetts. Printed and bound by Puritan Press Inc., in Hollis, New Hampshire. The paper is Rolland Enviro100, an acid-free, 100 percent PCW recycled sheet. manufactured in the united states of america CONTENTS List of Illustrations ix Preface xiii Introduction 1 1. Land Value Capture: Types and Outcomes 3 Gregory K. Ingram and Yu-Hung Hong Conceptual Frameworks and Historical Experiences of Land Value Capture 19 2. Land Value Capture and Justice 21 Susan S. Fainstein 3. Takings and Givings: The Analytics of Land Value Capture and Its Symmetries with Takings Compensation 41 Perry Shapiro commentary 69 Henry E. Smith 4. The Unearned Increment: Property and the Capture of Betterment Value in Britain and France 74 Philip A. Booth commentary 94 Louis G. H. Albrechts 5. Special Assessments in California: 35 Years of Expansion and Restriction 97 Dean J. Misczynski commentary 116 Carol E. Heim vi Contents Land Value Capture Instruments 121 6. Collecting Land Value Through Public Land Leasing 123 John E.
    [Show full text]
  • Ground Rent- Process and Issues
    facebook.com/MVLSProBono/ Maryland Volunteer Lawyers Service @MVLSProBono Maryland Volunteer Lawyers Service Visit www.mvlslaw.org/events for more info on upcoming training and clinics! GROUND RENT- PROCESS AND ISSUES LOUISE M. CARWELL MARYLAND LEGAL AID APRIL 15, 2020 A Little Background The Ground Rent system was established in England and was imported to the colonies during the 17th century. Residential ground rents are only widely used in Maryland and Pennsylvania. Maryland ground rents appear mainly in Baltimore and were created to make it less expensive to own real property because only the structure was sold and not the land. Some states have commercial ground leases but they are different from the ground rent topic discussed in this presentation. What is a Ground Rent? A ground rent is a lease, usually for 99 years, that renews forever. As defined in ACM, Real Property Article 8-801 “Ground lease” means a residential lease or sublease for a term of years renewable forever subject to the payment of a periodic ground rent. Ground rents are a form of investment to collect small amounts of rent on usually in two yearly installments. Ground rent holders often own multiple properties. Ground Rent Deeds are filed in the land records of the Circuit Court. A Deed for multiple ground rents owned by one owner are the typical way that the Deed will be written. What is a Ground Rent Continued The owner of the ground rent is often referred to as the “holder” or “landlord” The owner of the structure that sits on the land is usually referred to as the “tenant”.
    [Show full text]
  • Escalating Ground Rents Toolkit for Licensed Conveyancers
    Escalating Ground Rents Special Bulletinn Toolkit for Licensed Conveyancers Escalating Ground rents have been in the news recently, with many lenders refusing to lend on new-builds that have ground rents that double or increase dramatically over the period of the lease. The SLC is issuing this special bulletin to ensure its members are aware of the issue and can deal with it appropriately. Clients, lenders and valuers must all be involved in assessing whether this is an issue on all transactions, not just new-builds. This toolkit contains the CML release, a suggested Client Guide, and an Excel ground rent estimator. The position will no doubt evolve over the coming months, but this guide also contains some sug- gested ways of dealing with the issue. Four Ground Rent Traps 3. Higher price for enfranchisement or lease extensions Clients need to be made aware of the consequences of taking Many owners who want to extend their leases will find that a a lease with a potentially high ground rent set out in this current or possible future high ground rent will significantly bulletin, and be advised to get their valuers advice, increase the cost of buying a lease extension, or buying the freehold as appropriate. Some house-builders reserve a significant ground rent, that could increase to more than £250 (or £1,000 in Greater London) on a future review of the ground rent. Sometimes the ground rent doubles every 10 or 20 years, or will increase 4. Unsaleable leasehold properties The combined effect of all, or any, of the previous traps may by a stated percentage.
    [Show full text]
  • PDF the Whole Order
    Changes to legislation: There are currently no known outstanding effects for the The Property (Northern Ireland) Order 1997. (See end of Document for details) STATUTORY INSTRUMENTS 1997 No. 1179 (N.I. 8) The Property (Northern Ireland) Order 1997 - - - - - - 8th April 1997 PART I INTRODUCTORY Title and commencement 1.—(1) This Order may be cited as the Property (Northern Ireland) Order 1997. (2) This Order shall come into operation on such day or days as the Head of the Department of Finance and Personnel may by order appointF1. Annotations: F1 partly exercised by SR 1997/328; 1999/461; 2002/252 General interpretation 2.—(1) The Interpretation Act (Northern Ireland) 1954 applies to Article 1 and the following provisions of this Order as it applies to a Measure of the Northern Ireland Assembly. (2) In this Order— “the Act of 1971” means the Leasehold (Enlargement and Extension) Act (Northern Ireland) 1971; “the appointed day” means a day appointed under Article 1(2); and, if different days are appointed for different provisions of this Order or for different purposes of the same provision, any reference in such a provision to the appointed day is a reference to the day appointed for the coming into operation of that provision or its coming into operation for the purpose in question; “building lease” means a lease of land made for the purposes of having buildings erected thereon (and a lease is deemed to be made for those purposes if, at the time when it is made, planning permission has been applied for, or is in force, for those purposes); “business purposes” means purposes other than the purposes of a private dwelling; and, for the purposes of this Order, land is used for business purposes if it is not a dwelling-house; Definition rep.
    [Show full text]
  • Fannie Mae Guidelines on the Valuation of a Property Subject to a Leasehold Interest And/Or Community Land Trust (CLT)
    3900 Wisconsin Avenue NW Washington, DC 20016-2892 Phone (202)752-7000 Fannie Mae Guidelines on the Valuation of a Property Subject to a Leasehold Interest and/or Community Land Trust (CLT) Leasehold Interest Leasehold interest is the right to the use and occupancy of real property by the existence of a lease agreement. The lessee (tenant or renter) enjoys these rights for a stipulated period of time, subject to the payment of rent and other conditions. The valuation of a leasehold interest may require complex analysis, so the appraiser should be prepared to develop a thorough, clear, and detailed narrative for the addendum section that describes the lease agreement’s terms and conditions and discusses their impact, if any on value and marketability. The leasehold box should be checked if the house being appraised is on leased land or is subject to what is termed a “ground rent”. In brief, ground rent is the rent paid for the right to use and occupy land according to the terms of a ground lease. Although this is uncommon in most areas, there are areas of the United States where ground rents are very common. The terms of the ground lease should be identified and the effect of the lease analyzed in a narrative discussion attached as an addendum to the report. The appraiser should use sales of properties that have similar leasehold interests. When adequate, closed leasehold comparables are available, the appraiser will report them in the sales comparison section of our report forms to arrive at an opinion of the market value of the leasehold estate for the subject.
    [Show full text]
  • GUIDE to LEASEHOLD PROPERTIES WHAT IS a LEASEHOLD PROPERTY? There Are Two Ways You Can Hold Land, Freehold and Leasehold. Most H
    GUIDE TO LEASEHOLD PROPERTIES WHAT IS A LEASEHOLD PROPERTY? There are two ways you can hold land, freehold and leasehold. Most houses are freehold and virtually all flats are leasehold. The basic difference is that if you buy a freehold then you own it indefinitely. If you buy a leasehold then eventually the landlord gets the property back at the end of the lease. Lease is just another word for contract. A lease is a contract between landlord and tenant setting out their obligations to each other. For the contract to be called a lease it must give the tenant exclusive possession of the property for a certain period of time (aka the term) in exchange for the payment of a rent. Lease terms for residential property are usually at least 80 years and there are statutory rights for most tenants to renew their leases, so this isn’t usually a problem. There is nothing wrong with owning a leasehold property as long as the lease has been drafted properly. Your conveyancer will check the terms of the lease as part of the conveyancing process. WHY DO FLATS NEED TO BE LEASEHOLD? One of the reasons that flats are sold leasehold is so that the repairing obligations for the structure of the building can be enforced. In contrast, positive freehold repairing obligations cannot be enforced. This is a problem with land law that has been unresolved for a very long time. With leasehold property the positive and negative obligations can always be enforced between the landlord and current tenant. Let’s assume that there are two freehold flats, Steve has just bought the freehold of his first floor flat and the roof.
    [Show full text]
  • The Taxation of Maryland Ground Rents, 3 Md
    Maryland Law Review Volume 3 | Issue 4 Article 2 The aT xation of Maryland Ground Rents H. H. Walker Lewis Follow this and additional works at: http://digitalcommons.law.umaryland.edu/mlr Part of the Property Law and Real Estate Commons Recommended Citation H. H. Lewis, The Taxation of Maryland Ground Rents, 3 Md. L. Rev. 314 (1939) Available at: http://digitalcommons.law.umaryland.edu/mlr/vol3/iss4/2 This Article is brought to you for free and open access by the Academic Journals at DigitalCommons@UM Carey Law. It has been accepted for inclusion in Maryland Law Review by an authorized administrator of DigitalCommons@UM Carey Law. For more information, please contact smccarty@law.umaryland.edu. MARYLAND LAW REVIEW [VOL. III THE TAXATION OF MARYLAND GROUND RENTS By H. H. WALKER LEWiS* Few intricacies of the law are more diabolically designed to baffle and befuddle than the Maryland system of ground rents. The writer, for one, long labored under the im- pression that they popped out of the ground in the spring only to dash back in terror of their own shadow. If so they are not the only ones who have suffered frustration, and it is the possible confusion of some of our tax masters1 that forms the chief justification for this paper. One must live with a ground rent and become acclimated to its habitat to know its qualities. Recourse to the legal encyclopedias is almost hopeless2 and the only thorough text on the subjects has become so rare as to require a lock and key to preserve it in the Baltimore bar library.
    [Show full text]