Category Archives: Buyers

Buyer’s Post-Settlement Checklist

Congratulations! Closing on your new home is no small feat. You probably feel like you just finished running a marathon, but the trek isn’t over. In fact, your journey as a homeowner is just beginning.

Here is a list of things you should consider doing once you’ve closed on your house:

Safety

Locks

While homeowners are expected to hand over all keys to the property, you never know who else may have an old copy. After closing on your property, you should change al the locks on your new home. Additionally, if the property has any keypads, you should change the codes of those too.

Smoke & Carbon Monoxide Detectors

Safety comes first. You should test your smoke and carbon monoxide detectors during your first post-settlement visit. According to the U.S. Fire Administration, smoke detectors should be replaced 10 years from the manufactured date.

Some maintenance tasks, such as testing carbon monoxide and smoke detectors, can’t wait. You, your family’s, and your friends’ safety all depend on functional detectors, so as soon as you’re done basking in the glory of closing title and escrow, check the smoke and carbon monoxide detectors.

Cleaning

Paint & Flooring

Nothing freshens up a home much more than a fresh coat of paint and new flooring. Over time dirt and debris gets trapped into the walls and carpet and can result in unpleasant smells. Sometimes these phantom odors may become unrecognizable to the owner because they became accustomed to it over time. They may have even been hidden from you during your initial walkthrough. Whether the culprit is a pet, smoke, or otherwise, it may not have bee detected if masked by a candle or another fragrance.  One of the quickest remedies is to remove all carpet and and padding, along with deep cleaning the walls and ceilings before painting. However, if paint and new flooring isn’t necessary or in the budget, wiping all surfaces down with a non-abrasive cleaning solution and renting a professional-grade carpet cleaner is a great alternative.

Walls, Floors, and Fixtures

The property is due for a deep clean. Depending on the condition the property was left in, this task could be an evening project or a multi-day task. Wipe down all walls, countertops, windowsills, and fixtures. Then, vacuum or mops all floors. If cleaning seems to be an overwhelming project, consider asking for help from friends and family, or call a professional cleaning company.

HVAC Unit

One of the most commonly neglected items in a house is your HVAC system. Routine maintenance for your HVAC system is important. While annual inspections are often recommended, most homeowners forget to regularly replace their air filter let alone have a professional inspect the unit to ensure it is operating properly.

A deep clean of your home is likely to stir up a lot of dirt and dust, especially if you are repairing holes, cracks, or nicks in the drywall. Be sure to replace the air filter and consider contacting a professional to inspect your unit and provide a tune-up. Nothing is worse than having your HVAC unit be nonoperational in the middle of a frigid winter or sweltering summer. Budget for this annual task, as an inefficient system will increase energy bills and will decrease the system’s expected lifetime. A routine maintenance check will help you save money in the long-run.

Documentation

CLOSING PACKET

At settlement, you likely received a closing packet. This typically includes your mortgage, promissory note, deed, and closing disclosures. I would also recommend keeping a copy of your buyer-agency agreement, purchase agreement, seller’s disclosures, title insurance policy, and home inspection report in a separate folder or binder someplace safe. As soon as possible, you should also place a copy of the documents in a fire-proof location, such as a safety deposit box or safe.

Change of Address

Don’t forget to notify required parties of your change your address:

  • Insurance Companies
  • Bank / Financial Institutions / Credit Card Companies
  • Utility Companies
  • United States Postal Service
  • Department of Motor Vehicles
  • Employer
  • Subscriptions (mailers and digital)
  • Related Service Providers (e.g. doctor, dentist, accountant, lawyer, etc.)
  • Friends & Family

Payments

Mortgage

Consult with your lender to understand who is servicing your loan and how payments can be made. You may not be in the habit of paying a mortgage ever month, especially if you never owned a home before. However, it is essential that you may each payment on time and in full. Be sure to know when your payment is due and how much money you will need to cover it. I recommend regularly setting aside money to help cover the cost. While mortgage payments are due monthly, I suggest transferring a portion of the mortgage every pay period (e.g. setting aside $600 every two weeks for a $1,200 monthly mortgage payment). You can then use the leftover money as an emergency fund, home maintenance fund, or extra money to pay towards your principal. If you are unsure how much money is owed, review your closing disclosure. You will find a breakdown of the mortgage payment, interest, taxes, and insurance in your closing disclosure.

Pre-Qualification vs. Pre-Approval

Getting ready to buy a house? You’ve probably heard someone talk about pre-qualification. They may have mentioned that you should get pre-approved. In fact, the two terms are often used interchangeably. However, their actual definition, requirements, and significance are very different.

Pre-Qualification

Pre-qualification is the first step you’ll take if you are ready to start your new home search. To begin, you will contact a mortgage loan officer, inform them that you are looking to buy a house in the upcoming months, and they will begin to gather some basic information, such as income, monthly debts, and credit score. After providing information online, over the phone, or in-person, the lender will be able to provide you with an estimate of your maximum monthly mortgage payment and how much you may be able to borrow. The goal of this process is to give you an approximate starting point so you know roughly how much you may qualify for.

 

Pre-Approval

Once you are pre-qualified, the next step in the process will be to get pre-approved. This process is a bit more involved. Your loan officer will require more paperwork. While the process may vary by lender, you will typically need to provide copies of your paystubs, bank statements, and tax returns. In addition to reviewing your financial documents, the loan officer will also check your credit history to evaluate your creditworthiness and financial situation. At the end of the process, the loan officer will provide you with a letter of pre-approval, a document stating how much you are approved to borrow. 

In a balanced market, a letter of pre-approval helps give you a competitive advantage. However, in a seller’s market, a letter of pre-approval is an expectation most sellers will rarely disregard. While the letter isn’t final approval and you will need to go through processing and underwriting, the letter is a symbol of your commitment; it helps sellers know that you have taken the appropriate steps to submit verifiable documentation to a lender – helping them know they are one step closer to making it to the closing table.

 

Final Thoughts

While nothing is guaranteed and there are some items you will need to be mindful of as you navigate financial aspect of the home buying process, pre-approval brings you closer to your goal of homeownership. Not ready for pre-approval? Not a problem. Pre-qualification can help you understand your current financial situation and provide you with an approximation of what you may qualify for.

If you have questions about the home buying process, do not hesitate to contact me. I can guide you throughout the different stages and connect you with a team of professionals that have the knowledge and experience to help you achieve your dream.

Auction Due Diligence

BUYER BEWARE!

Caveat Emptor

Real estate transactions are governed by local, state, and federal laws. One of the phrases that dates back to old English law is the Latin phrase, caveat emptor, which means, “let the buyer beware.” The phrase is related to the verb “cavēre”, meaning “to be on guard.” Absent any contract language or terms that contradict this idea, the phrase implies that the buyer should proceed with caution; they are purchasing the property in its current condition, with any flaws that may exist and without any warranties. Buyer due diligence is imperative in any real estate transaction, but it is critical in an auction sale.

Disclosure Requirements

Caveat emptor implies that the seller is not responsible for any additional discourse of adverse conditions that may exist. Due to local legislative action, sellers in your jurisdiction may be responsible for disclosing certain material defects. Depending on the laws that exist in your area, it may be the responsibly of the buyer to provide disclose issues, particularly items in a that may risk an occupant’s health and safety in residential real estate transaction. In some states, sellers cannot waive disclosure with a disclaimer statement. In those instances, a seller’s failure to disclose information may be grounds for fraud. Even though misrepresentation by non-disclosure is a serious offense, like any illegal act, the law only provides recourse for a victim. As a buyer, you will want to best-protect your interest. For that reason, it is recommended that buyers perform their exercise due diligence as much as possible, as nobody will care work to protect your interests more than yourself.

As-Is, Where-Is

As-Is is a term used in warranty law to disclaim the seller’s liability. Essentially, the use of this phrase implies that the buyer is accepting the property in its current state, whether faults to the property are present and apparent or not. This language clarifies that there are no explicit or implied warranties to the properties condition, and it is used to help protect the seller.

The inclusion of an “as-is” clause in a does not necessarily insulate the seller from their common law duty to disclose defects or the required information, as required by local, state, or federal law. Furthermore, “as-is” language does not protect the seller from failure to disclosure, misrepresentation or fraud. Failure to disclose, whether intentional or negligent, is the result of not revealing known concealed defects that are not apparent from a visual inspection of the property.

As previously mentioned, many states have started to require that sellers disclose certain material defects or items related to the condition of a property, even if the property is being sold in as-is condition. In Maryland, for example, a seller cannot shelter behind caveat emptor. In the sale of a residential property in Maryland, sellers need to either complete a multi-page document disclosing the condition of various items, or sign a disclaimer statement. That disclosure statement, although stating that the property is being sold in as-is condition, requires sellers to acknowledge if they are aware of any latent defects – a defect that may be hazardous to someone’s health or safety.

Even if you are buying a property in as-is condition, you should consider hiring a professional to conduct an inspection of the property prior to purchase. There are often many situations where a defect may be visible from a home inspection; whereas, the seller may not have any personal knowledge of the defect.

Take Action – Perform Due Diligence

Performing due diligence means to investigate the facts about the property. Buyers look at performing due diligence as, “doing their homework,” before making an offer or submitting a bid, and then continuing with that same due diligence prior to settlement. The performance of due diligence can seem like an exhaustive, and with experience, the task may only become longer. Although the process may feel daunting, it is an essential step that buyers must take to protect their investment and reduce liability.

Understanding Auctions

What Is An Auction?

An auction is a sales event where prospective buyers place competitive bidders for property. Auction formats can widely vary, but for the purpose of this post, we will focus on the types of auctions and auction formats that are most common in real estate transactions.

When the word auction is mentioned, people usually think of the time they watched an episode of a storage container being auctioned, or maybe they remembered that time they heard an auctioneer quickly reciting numbers as they watched the sale of a historic Aston Martin. Auction chants are often what the general public envisions when they think of an auction, but it is important for buyers and sellers to understand the mechanics of how auctions operate, instead of simply being aware of what auctions appear to be. In short, buyers and sellers must understand why auctions are effective rather than just what an auction is.

Why Auctions?

As mentioned previously, auctions are sales events. They are nothing more than a marketing strategy that buyers use to achieve the best and highest price. With that said, auctions can be attractive options for both buyers and sellers. Now, you may be scratching your head right now asking, “How can an auction be an attractive option for buyers and sellers both?” Right now, you might be thinking that they can’t. However, the honest, more complicated answer is that they can.

You simply need to understand the mechanics behind the auction. Behind all of the theatrics and hyped-up energy that an auction brings, there are motivated sellers and ready, willing, and able buyers. An analysis of those two parties, and their intentions, will help you better understand how auctions can be fruitful for both buyers and sellers, given the right circumstances. Let’s dive into the why – understanding why auctions are effective at bringing buyers and sellers together. Before placing your first bid though, you will need to understand the mechanics of an auction.

Types of Auctions

In the world of auctions, there are a wide variety of auction types – increasing bid auctions, decreasing bid auctions, sealed bid auctions, and more. Each of these auction types are associated with a variety of strategies that can be advantageous to buyers and sellers for numerous reasons. Before you can plan your strategy, however, you need to understand the fundamentals of each auction type.

English Auction

English Auctions, also known as an ascending price auction, is an open bid auction where the price will increase as bids are placed.

Dutch Auction

Dutch Auctions, also known as a descending price auction, is an open bid auction where the price will decrease as bids are placed.

Sealed Bid Auction

A sealed-bid auction is a type of auction where bidders discretely submit their bids to the auctioneer. The bids are submitted in a manner where the bids of others are not disclosed to other auction participants. At the conclusion of the auction, the seller usually accepts the highest bid.

Due to the nature of these auctions, they are not usually used in typical real estate transactions. Instead, they are often used in bidding for situations where the bid or offer for contract involves more than just price. For example, a REO (real estate owned) sale may commonly ask that offers be tendered via a sealed bid auction. Although the offer price plays a large role in the decision-making process, the seller may also consider other terms – settlement timeframe, method of financing, etc. Another example of a sealed-bid auction would a bid for a government contract. This may entail an offer involving cost for services, but the offers being submitted may vary in other terms as well.

Common Real Estate Auction Types

English Auctions are the most common type of auction used for the sale of real estate. Most bidders will encounter two main sub-types of increasing bid auctions – absolute auctions and reserve auctions. Let’s look at how Absolute Auctions and Reserve Auctions work.

Absolute Auctions

An absolute auction is the most classic type of auction. In an absolute auction, the property, whether real estate or otherwise, is sold to the highest bidder regardless of price.

Example of an Absolute Auction

Jamie used to own a restaurant. After experiencing a series of hardships, she was forced to close her business and sell all of the kitchen equipment. She needs to immediately liquidate all of the assets and does not have a minimum price that she is trying to get for the items, as she cannot afford the cost of placing the items in storage. Jamie decided to hire a local auctioneer to sell the items at a live, on-site auction. The auctioneer will start the bidding off at $0. Although the auctioneer may suggest bidding increments to help control the flow of the auction, each item will sell for whatever high bid is achieved. Since Jamie is not reserving the right to withdraw the items from sale if a certain minimum bid is not met, this is an absolute auction.

Absolute Auctions & Real Estate

Due to the nature of what absolute auctions are, many sellers do not elect to sell real estate at an absolute auction. Instead, they tend to sell their property in a reserve auction. It is common for many auctioneers across the United States to advertise some auctions as “Absolute over $x,xxx” (e.g. Absolute over $100,000). These auctions, however, are not true absolute auctions. They are actually reserve auctions with the minimum bid being disclosed and advertised as the starting bid.

Reserve Auctions

Reserve auctions are commonly used in the sale of real estate. In a reserve auction, the seller, trustee, or their agent reserves the right to accept or decline any and all bids. At the conclusion of the auction, the high bid will be placed into the reserve, subject to the seller’s confirmation.

Prior to the start of the auction, the seller usually informs the auctioneer of their reserve price. The auctioneer will not usually disclose the reserve price to bidders prior to the auction. As bidding winds down, the auctioneer usually informs the public whether the high bid will be accepted or if it will placed into reserve for the seller’s confirmation.

In many live auctions, the seller is usually on-site and able to confirm whether the high bid will be accepted. At the conclusion of the reserve auction, the seller has three options if the reserve is not met. The seller can…

• accept the high bid, even though it is below their initial reserve price

• counter the high bidder, disclosing what they will sell the property for

• reject the high bid, and withdraw the property from sale

Example of a Reserve Auction

Mark used to own hundreds of rental properties. He is nearing retirement and is beginning to liquidate some of his assets. He knows the value of the properties, but since the properties are currently rented, he is electing to sell them at public auction. He prefers to provide all prospective buyers the day of the auction, instead of trying to coordinate multiple showings the with tenants.

Comparable properties in Mark’s neighborhood are selling for $120,000, but Mark knows that his properties need some work due to the wear-and-tear from the long-term tenants. Since the properties are rented, Mark doesn’t want to pay for any repairs. For that reason, he is stilling the property in as-is condition with a reserve price of $95,000.

Example A: Reserve Not Met

The day of the auction, the auctioneer opened up bidding at $50,000. The property quickly increased in price from $50,000 to $92,000. As the auction closed out, the auctioneer announced that the reserve was not met and the high bid would be placed into reserve, pending the seller’s confirmation. Mark considered the results of the auction, and had three options:

• accept the high bid of $92,000

• reject the high bid with a counteroffer between $92,000 and $95,000

• reject the high bid, withdraw the property from sale, and consider re-listing the property for another auction

After careful consideration, Mark decided to accept the high bid of $92,000. He knew that the carrying cost and additional risk of letting the property linger on the market. To him, it was not worth the chance of potentially only $3,000 more. He also knew that auctions don’t have guaranteed results. In reality, the next auction could end with a high bid less than $92,000.

Example B: Reserve Met

If Mark’s reserve was met, once a bid of $95,000 is met or exceeded, the auction would convert from a reserve auction to an absolute auction, where Mark would be expected to accept the high bid, regardless of the price.

Reserve Auctions & Real Estate

As highlighted in Mark’s scenario, auctions do not have guaranteed results. Although a reserve auction can help protect a seller from being required to sell the property for less than what they are willing to accept, it doesn’t mean the seller will always achieve exactly what they are expecting. Reserve auctions are often scrutinized because bidders may win an auction and still lose. Some critics of reserve auctions argue that auctions are simply a marketing gimmick to achieve a price at or above their asking price. The reality, however, is that auctions can favor buyers as much as they favor sellers. Buyers and sellers simply need to have a clear strategy in mind before participating in an auction sale.

7 Reasons to Own a Home

7 Reasons to Own a Home

1. Tax Benefits

The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, and some of the costs involved in buying a home.

2. Appreciation

Historically, real estate has had a long-term, stable growth in value. In fact, median single-family existing-home sale prices have increased on average 5.2 percent each year from 1972 through 2014, according to the National Association of REALTORS®. The recent housing crisis has caused some to question the long-term value of real estate, but even in the most recent 10 years, which included quite a few very bad years for housing, values are still up 7.0 percent on a cumulative basis. In addition, the number of U.S. households is expected to rise 10 to15 percent over the next decade, creating continued high demand for housing.

3. Equity

Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings

Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability

Unlike rent, your fixed-rate mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will likely increase.

6. Freedom

The home is yours. You can decorate any way you want and choose the types of upgrades and new amenities that appeal to your lifestyle.

7. Stability

Remaining in one neighborhood for several years allows you and your family time to build long-lasting relationships within the community. It also offers children the benefit of educational and social continuity.

REALTOR® Magazine | RealtorMag.Realtor.org | National Association of REALTORS | Copyright 2015. All rights reserved.

Benefits of Buying with a REALTOR®

7 Reasons You Should Buy with a REALTOR®

REALTORS® aren’t just agents. They’re professional members of the National Association of REALTORS® and subscribe to its strict code of ethics. This is the REALTOR® difference for home buyers:

1. Ethical Treatment

Every REALTOR® must adhere to a strict code of ethics, which is based on professionalism and protection of the public. As a REALTOR®’s client, you can expect honest and ethical treatment in all transaction-related matters. The first obligation is to you, the client.

2. An Expert Guide

Buying a home usually requires dozens of forms, reports, disclosures, and other technical documents. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes. Also, there’s a lot of jargon involved, so you want to work with a professional who can speak the language.

3. Objective Information and Opinions

REALTORS® can provide local information on utilities, zoning, schools, and more. They also have objective information about each property. REALTORs® can use that data to help you determine if the property has what you need. By understanding both your needs and search area, they can also point out neighborhoods you don’t know much about but that might suit your needs better than you’d thought.

4. Expanded Search Power

Sometimes properties are available but not actively advertised. A REALTOR® can help you find opportunities not listed on home search sites and can help you avoid out-of-date listings that might be showing up as available online but are no longer on the market.

5. Negotiation Knowledge

There are many factors up for discussion in a deal. A REALTOR® will look at every angle from your perspective, including crafting a purchase agreement that allows enough time for you to complete inspections and investigations of the property before you are bound to complete the purchase.

6. Up-To-Date Experience

Most people buy only a few homes in their lifetime, usually with quite a few years in between each purchase. Even if you’ve done it before, laws and regulations change. REALTORS® handle hundreds of transactions over the course of their career.

7. Your Rock During Emotional Moments

A home is so much more than four walls and a roof. And for most people, property represents the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on the issues most important to you.

REALTOR® Magazine | RealtorMag.Realtor.org | National Association of REALTORS | Copyright 2015. All rights reserved.

Do I Need a REALTOR®?

It’s time. You are to embark on your journey as a first-time homebuyer. You could try to do it on your own. However, like many tasks in life, some are better handled by a professional. After all, the home-buying process can get complicated. Fortunately, with the assistance of a REALTOR®, the burden of finding and buying the home of your dreams can be lessened.

Who represents me, the buyer?

If you have stumbled across a property being advertised for sale, you will quickly find the name, phone number, and other contact information for a real estate agent that listed the property for sale. If you call their office and ask to speak to the listing agent, you will usually discover how quick they may be to offer help. However, before speaking to them, you need to understand the distinct difference between two terms – client and customer.

Listing agents, also referred to as a seller’s agent, works for the real estate company that lists and markets the property for the sellers. They exclusively represent the seller as their client. A seller’s agent may assist the buyer in purchasing the property as. a customer, but his or her duty of loyalty is only to the seller, their client.

A buyer’s agent, on the other hand,  is a real estate professional who is legally licensed to represent the buyer and their interests in real estate transactions. That means they represent you and will protect your interests.

What is the difference between a REALTOR® and a real estate agent?

REALTORS® are members of the National Association of REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®, but all REALTORS® are licensed real estate professionals. 

About PMI

What is PMI?

Private Mortgage Insurance, also referred to as PMI, is a type of mortgage insurance that is commonly required for conventional loan borrowers who finance their home purchase with less than a 20% downpayment.

Private mortgage insurance, also called PMI, is a type of mortgage insurance you might be required to pay for if you have a conventional loan. Like other kinds of mortgage insurance, PMI protects the lender—not you—if you stop making payments on your loan. 

What Does PMI Protect?

If you have ever driven a car or rented an apartment, you may be familiar with insurance. While automobile insurance and renter’s insurance are two very different loan products, they both have one one essential component in common; they both protect an asset.

Hopefully you have never encountered a situation where you needed to file a claim and use your insurance to cover a loss. However, one of the most overlooked details about insurance is that it really isn’t about you at all.

Right now, you are probably thinking I’m about to say that it is about the asset – your car, belongings in the apartment, or house.

It’s not.

The reality of the matter is that while insurance can help cover the cost of a loss, insurance is often required to help cover someone else’s loss.

Private mortgage insurance isn’t any different.

So, Who Does PMI Protect?

PMI protects your lender. In the event that you stop making payments on your loan, this insurance protects your lender against losses from default.

Does Everyone Pay PMI?

Lenders usually require PMI with conventional loan products if your downpayment is less than 20%. For example, if you buy a home for $200,000, you’ll likely need a down payment of $40,000 to avoid paying PMI. After you’ve bought the home, you can typically request to stop paying PMI once you’ve acquired 20% equity in your home. PMI is often cancelled automatically once you’ve reached 22% equity.

PMI only applies to conventional loan products. Other types of loans usually include other types of protections. For example, an FHA loan requires a Mortgage Insurance Premium (MIP), which is is structured differently than PMI.

Understanding Ground Rent

What is Ground Rent?

Ground rent is often an unfamiliar, but important, topic for homeowners to understand. This simple topic is often misunderstood by many individuals in the industry. As a result, it is critical that all buyers purchasing within jurisdictions with ground rent are aware of what ground rent is and what legislation may prevail over the matter.

Ground rent refers to recurring payments that are made by a tenant to a ground leaseholder, an entity (individual or business) who holds a reversionary interest in the property or the “ground” beneath a home. A property that is subject to a ground rent is referred to as being conveyed with leasehold interest. Whereas a property being sold without the presence of ground rent is conveyed via fee simple ownership.

Fee Simple vs Leasehold

Fee simple ownership is one of the most common forms of ownership to property. A fee simple buyer acquires ownership of the entire property, the land and any improved property. An owner of a property that is in fee simple state is considered to be the freeholder.

Leasehold interest is created when a freeholder, the fee simple landowner, creates a ground rent with a lessee. The lessee, the tenant or person holding the lease to the property (in this case, the ground rent), agrees to buy the property and must pay the ground rent.

Reversionary Interest

Ground rent arrangements different from typical tenant-landlord relationships, since the ground leaseholder only has a reversionary interest. Reversionary interest is a legal term used to refer to the interest a party has in a property. A ground rent holder with reversionary interest reserves the right for the property to reverse ownership back to them upon the occurrence of a specific condition. In this case, the reversionary interest exists when the ground rent lessee (the tenant) is delinquent in their ground rent payments owed to the the ground rent holder (the person owed money for the ground rent).

Essential Understandings

The topic of ground rent can be quite complex, particularly because it is not very common in many regions. However, for most homeowners, the topic can be simplified into two main points of discussion:

  • Ground Rent Payments
  • Length of Ownership

Ground Rent Payments

For most homeowners that own a property in leasehold status, their main concern is usually ensuring that timely ground rent payments are made. Be sure to be aware of the following:

  • When are the ground rent payments due?
  • How much money is owed?
  • Who do I make the payments payable to?

Length of Ownership

In Maryland, legislation has been passed to make most properties subject to a capitalized redemption amount. For this reason, it may be beneficial to redeem the ground rent at the time of purchase instead of consistently making payments for possibly 20, 30, or 40+ years. The redemption amount can be computed by dividing the annual ground rent amount by the capitalization rate. Capitalization rates vary dependent upon the year the leasehold status was established.

Want to Learn More?

Learning about the history of ground rents can help individuals better understand what ground rent is and how the presence or absence of ground rent may impact the ownership of a property.

Looking to buy a property in Maryland? I would appreciate an opportunity to schedule a time to get together, review your needs, and discuss the home buying process with you.