Evening star., 1933-10-15
BALTIMORE FIGHTS
OLD TAX SYSTEM
Realty on Which Owners Pay
Nothing Derives 6 Per Cent
Under Ground Rent Law.
Special Dispatch to The Star.

BALTIMORE, October 14-Millions
Of dollars Of real estate on which the
owners pay no taxes but derive per
cent interest per annum Is situation
in Baltimore today which is causing
considerable comment from other realty
owners who pay the taxes.
This unusual condition is due to the
system Of ground rents which has been
in effect in Maryland since before the
Revolution, when land grants were
given early settlers by the King of Eng
land. These grants were/ held under
leaseholds Of SO years with privileges Of
renewals, following the custom in the
mother country
After the Revolution all land grants
were abolished and the General As
sembly Of Maryland in the latter part
OF the eighteenth century established
more City and a few sections of the
State. Under this system tracts of
land were bought and the owners col
lected per cent per annum from the
owners Of property erected on the land,
and in addition taxes on the land are
paid by the property owner and not by
the land owner.
Four Glasses in City.
There are now four classes Of ground
rents in Baltimore:
l. Irredeemable rents, which can only
be redeemed upon the consent Of the
ground rent owner.
2. Fifteen-year rents, redeemable at
specified rate usually around per
cent. after IS years from the date of
the original lease. These rents have
long since expired and comparatively
few Of them are offered on the market.
3. Ten-year rents. redeemable on six
months notice at 6 per cent after 10
years from date Of the original lease.
This class Of rents has also expired and
comparatively few of them are offered,
and when they are for sale they are
expired rents" and sell at per cent.
A. Ffve-year rents. These rents are
are redeemable at per cent any time
on 30 days notice five years after the
date of the original lease.
Some Rents Nominal.
While the average ground rent is on
a 6 per cent basis, there are a number
of rents which are purely nominal, such
as ST a year, and in some instances,
especially in the old sections Of the city,
tobacco, which in the early days was
used extensively in place of money.
The tobacco rental ranged from as
low as a pound to 25 and so pounds.
While these tobacco rentals" do not
hold good today except in very few in
stances, the original contract has never
been changed and it is likely would be
upheld by the courts if the leaseholder
made test case.
Most of the irredeemable ground
rents are in the business section OF the
city and some of them, on which the
tenant pays several hundred dollars
year. in addition to taxes. originally
called for the payment OF several
pounds Of tobacco.
The system of ground rents. however,
who wodld not have been able to do
so II they had to buy the land with
the homes. and no doubt is responsible
for the fact that Baltimore today has
more home-owners in proportion to
population than any other city in the
country. being known as 1.-The city OF
home owners"
With the steady increase in taxes
during the last decade. however, the
question of changing this law has been
brought up from time to time, but
nothing has been done.
Movement Seeks Change.
Today. with the tax rate $2.65 per
SlO0 and with prospects of a still higher
rate next year, a movement is under
way for a change in the system by
which the owner Of the ground should
pay the taxes, instead of the property
owner paying for both the building and
the land.
This situation has reached point
where 1t has become serious burden to
the small property owner to pay both
ground rents ranging from $50 to as
high as $120 a year and on top Of this
taxes on both his home and land, while
the owner of the land pays nothing.
While the latest movement for the pay
ment of land taxes by the owner of the
land has just been started. there Is
some talk of having bill along this
line introduced at the special session OF
the Legislature which Gov. R1tchie Is
expected to call next month for the
regulation Of liquor traffic, when the
prohibition law Is repealed.