Attorneys for thousands of ground-rent holders told an Anne Arundel County judge Wednesday that a reform law tramples their property rights, particularly through a process that they say makes delinquent rent collection cost more than the rent payments are worth.
Edward J. Meehan, representing the group seeking to have the ground-rent reform law eliminated, also asked Circuit Judge Paul F. Harris Jr. to rule that the now-defunct process of ejectment be protected. Ejectment let ground-rent holders take possession of the homes of people who failed to pay even small amounts of ground rent.
He argued that the process was protected under the same rationale that the state's highest court recently used to deal a significant blow to another challenge to the 2007 reform laws. In October, the Court of Appeals ruled that while a registry for ground-rent leases was legal, the penalty for failing to register was not. The court reasoned that ground-rent owners unconstitutionally lost all property rights if they didn't register the ground lease.
Meehan argued that eliminating ejectment was a similar attack on property rights.
"The Court of Appeals is speaking to you, Your Honor," Meehan said.
"We hear what the court is saying a little bit different," countered Adam Snyder, an assistant attorney general asking the judge to uphold the law.
Snyder contended that ground-rent holders can pursue deadbeat tenants by lawsuits or by the process in the new law that replaced ejectment. This process allows them to seek a lien on the house and either collect when it's sold or move to foreclose on it. As long as they have remedies, the owners' rights have not been taken away by state government, Snyder said.
"What happens if they declare bankruptcy? What happens if they are judgment-proof?" asked Harris, as he questioned Snyder about possible difficulties in recouping unpaid ground rent. Ground-rent owners say the process of recovery costs more than they'll recoup.
The arguments came as both sides asked Harris to rule without holding a full-blown trial in the second of two challenges to the legislature's overhaul of ground-rent laws. It also comes as legislators are preparing bills for the General Assembly session that opens next month to address the Court of Appeals decision that wiped out the cancellation of ground rents whose owners did not register with the state.