Ground Rents (fee, condo, agreements, property tax)

[Caladium]

We are thinking of buying a second home in Rehoboth Beach, DE. The condo complex has ground rents and the MLS listing says the ground rent expires in 13 years.

I'm new to the idea of ground rents and would like to hear the pros and cons of them. This will rental property for us for a few years, and then we intend to retire there and live in the condo. Does the expiration date mean that we might be given a notice in the future that we have to vacate the home so that the owner can build something new? If that's a likely outcome, that would be a deal breaker for us.

OTOH, if you have ground rents does that mean you don't have to pay property tax? That could make it attractive. The property also has HOA fee, a County Tax, a Water Fee and a Sewer fee, if that makes a difference.

[davecj]

Nope the ground rent is separate from property tax. The reason for it was to make owning property less expensive many years ago by allowing you to lease the land and own the building. Most in Baltimore are under $50 a year and kind of a joke but if you default on it the land owner can repo the property.

In Maryland you can buy out the land lease at any time. Not quite sure about Delaware but talk to a RE attorney or even your realtor.

[khuntrevor]

I saw a lot of that in Bal'mer, also. A big turn-off. Not a fan of leasehold agreements either.