Opinion ID: 2327958
Heading Depth: 2
Heading Rank: 1

Heading: Does Chapter 290 Operate Retrospectively?

Text: Retrospective statutes are those acts which operate on transactions which have occurred or rights and obligations which existed before passage of the act. Langston v. Riffe, 359 Md. 396, 406, 754 A.2d 389, 394 (2000). Retrospective statutes that abrogate vested rights are unconstitutional generally in Maryland; however, as we said in John Deere Const. & Forestry Co. v. Reliable Tractor, Inc., 406 Md. 139, 147, 957 A.2d 595, 599 (2008), this Court has only provided limited analysis of what constitutes a retrospective application of a statute. In John Deere, we explained that necessarily there is no bright line rule for determining what constitutes retrospective application, but opined nonetheless that retrospective statutes are those that would impair rights a party possessed when he acted, increase a party's liability for past conduct, or impose new duties with respect to transactions already completed. 406 Md. at 147, 957 A.2d at 599 (citing Landgraf v. USI Film Prods., 511 U.S. 244, 269, 114 S.Ct. 1483, 1499, 128 L.Ed.2d 229, 254 (1994)). In John Deere, we adopted the Supreme Court's Landgraf factors analysis for retrospectivity that evaluates fair notice, reasonable reliance, and settled expectations to determine the nature and extent of the change in law and the degree of connection between the operation of the new rule and a relevant past event. Landgraf, 511 U.S. at 270, 114 S.Ct. at 1499, 128 L.Ed.2d at 255. Applying the Landgraf model to the present case, fair notice is satisfied by the reasonable time period between enactment of Chapter 290 in 2007 and the registration deadline of 30 September 2010. Despite providing fair notice, however, Chapter 290 impacts impermissibly the reasonable reliance and settled expectations of ground rent owners by virtue of its extinguishment and transfer features as the consequences for non-registration (or untimely registration) of ground rents. The unique form of property represented by a ground rent is a fungible asset, freely bought and sold, and passed down through generations. Ground rent owners rely reasonably on the future income from ground rents or the ability to sell the fee simple interest on the open market or in the future, if necessary. Although some changes to the ground rent system occurred in Maryland before the adoption of Chapter 290, a ground rent holder's fee simple interest remained before Chapter 290 as settled an expectation as any fee simple owner's interest in real property. See generally Heritage Realty, Inc. v. Mayor & City Council of Balt., 252 Md. 1, 248 A.2d 898 (1969) (describing a series of statutes affecting ground rent redemption enacted from 1884 through 1900). The terms of the ground rent lease are fixed over the 99 year lease period and the conditions that create a reversionary interest in the property are predetermined. Before Chapter 290, owners of ground rent properties had no reason to believe that their interests were anything but well-settled, and had a reasonable basis to rely on the continuation of the state of the law permitting ground rent leases to continue. Ground rent leases, established through transactions consummated many years ago, create rights and obligations for ground rent owners and leaseholders. The registration requirement vel non of Chapter 290 is prospective in application, in that it regulates future action of ground rent owners; however, the extinguishment and transfer provisions of the statute are retrospective in application because, upon failure to register timely, the SDAT is required to reach back in time and divest the reversionary interest of the ground rent owner and cancel his/her/its right to receive future ground rent from the leaseholder. Once the extinguishment provision is triggered, Chapter 290 does not provide for additional remedies, such as an appeal or opportunity for a hearing. This seems a rather extreme regulatory overreaching to remedy anecdotal problems (not demonstrated to be systemic or endemic) as revealed by the 2006 newspaper articles and the legislative committee testimony in 2007 during consideration of the House bill that became Chapter 290. An example of an alternative statutory approach that would not be impermissibly retrospective in a similar registration scheme might have been one where failure to register a ground lease triggers an interim consequence, such as restrictions on collecting rents prospectively or a denial of access to the courts for enforcement of unregistered ground rents, until registration occurs. This would have been strikingly different than Chapter 290's abrogation of all the rights held by the ground rent owner, vested before the statute was enacted, for the failure to register before a fixed deadline.