What is a Land Lease?

Mary McMahon
Mary McMahon

A land lease is a type of financial arrangement in which the ground under a structure is leased, rather than sold to the builder, meaning that the land and the structure are owned independently. There are several reasons to enter such a contract, but it occurs most commonly when a real estate investor wishes to retain a piece of land, but not necessarily put energy into developing it. In this instance, the investor might work with a developer to create a land lease contract, allowing the developer to build a structure and rent or sell it, with the understanding that the land is leased and does not come with the building. This type of arrangement is more common in urban areas, and is often associated with cooperatives or tenant-owned buildings.

It's common for rental buildings like apartments or office complexes in urban centers to be developed on leased land.
It's common for rental buildings like apartments or office complexes in urban centers to be developed on leased land.

Generally, the contract for a land lease runs for at least 50 years. If the lease is near termination, the land owner is usually willing to renew it, providing that the building has been profitable and well maintained, although the amount of rent will likely increase, as the property value will have increased as well. The terms of a land lease usually require that the property be developed in some way, and that rents for the land are paid monthly or quarterly into the accounts of the landlord.

With a land lease, the ground under a structure is leased rather than sold to the builder of a project.
With a land lease, the ground under a structure is leased rather than sold to the builder of a project.

For people renting space in a structure on leased land, the terms of the lease arrangement are usually not very important. It becomes more of an issue when consumers wish to buy a condominium or apartment on this type of property, because it does have an impact on the quality of the investment. If the lease is about to run out, it may be difficult to find a financial institution willing to lend money, for example. However, if the lease does not expire until well into the future, buying a structure on a land lease can be a sound investment, because the building is usually significantly cheaper than neighboring real estate because of the unique situation.

The terms of a land lease arrangement are generally not important for people renting space in a building on leased land.
The terms of a land lease arrangement are generally not important for people renting space in a building on leased land.

Some national militaries also use land lease arrangements, either leasing former military property to developers or leasing land in other nations to establish base stations. In the instance of a military leasing its own land, the land is commonly leased to a city, rather than a developer, with the understanding that the military may take the land back at a later junction, or sell the land to the city at a low cost if the land is no longer strategically useful. When the military leases land in other areas, it does so to establish temporary bases, although usually a long lease term is negotiated.

The contract for a land lease generally runs for at least 50 years.
The contract for a land lease generally runs for at least 50 years.
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Discussion Comments

pinki001

I have some land in Bangalore and I want to sell that land. Since the land is big enough for an individual to buy it alone, I contacted a real estate land developer. The land developer wants to make a contract which says they will give 15 percent of the land value at the time of the contract and the remaining amount will be given within the progress of their projects. I am bit confused whether to make a deal with them or not. I need the money urgently.

anon951204

My husband and I signed a lease and paid $600 for a river lot from April to September. The owners keep threatening to kick us out for stupid reasons. They told us if they evict us we have to get our camper out that day and we won't get any of our money back. They also told us they can keep our camper if they evict us because its on their property now.

I would like to know if they have to give us time to get our camper out, if they can keep our camper and if we can get any of our money back. Where can i find the laws for signing a lease for a river lot?

anon947716

I live in a cantonment in a house whose land lease expired in 1986. I applied for renewal of the lease well in advance, but the Defense Estate Officer informed that as there is no Government policy about these leases, hence nothing can be done. Mine is not the only case. Throughout India thousand and thousand of such cases exist. The old cantt law was framed by Britishers and now the residents of the cantt areas are living in mortal fear.

My question is: What can be done in this case? Can I sell the house?

staceybeck01

Thanks for all the great advice. I need to find condos to stay in for a while until we can get a real house.

anon286030

What are the laws for seasonal camping grounds?

anon267122

@anon18445: Your father in law can give you the land but keep its mineral rights. That way you don't have to pay monthly, and he still owns everything (and has the right to sell) everything that comes out of the ground.

DenverTenn

I need some lucrative land lease ideas for rocky, thin soil in Middle Tennessee. It is located in an agricultural residential area but it is possible for me to get my land rezoned for commercial purposes. Please help.

anon138323

My brother has land, and i need to develop it into construction houses and sell them. but i don't have money to pay him for the land. how can i negotiate with him.

anon78220

I would like to buy a condo for cash and it has a land lease for 27 years. i am 58. is it safe to buy or should i look at others?

anon58845

is it true that when the lease contract expires, and i don't want to renew it for the price of the landlord doubles up, the building that i built in his land will be transferred to him and i don't have the right to demolish it? even if i already consumed a lot of money for the development of the building? Please reply.

anon53904

I have a big piece of land that i inherited from my grandparent and would like to lease it to agricultural developers. how would I go about doing that?

anon42593

I own property that I have allowed my ex- mother-in-law to hold a lifetime lease on because she has a trailer on it. She has now moved to a government assisted apartment and says she cannot sell it to me or anything because she will mess up her living arrangements. Can she at least put my name on this title so that I can rent this out without messing up her living arrangements.

anon35389

I am trying to refinance a condominium that has a separate land lease not covered by the HOA. Do most mortgages require land leases that extend beyond the term of the mortgage? If so, by how many years?

anon35234

Theoretically, if I own 1 acre of land is there a limit to how many people I can lease a portion of the land to. And do these leases have to be recorded with a governmental agency (i.e. Registry of Deeds)

anon18445

my father in law is "giving" us 4.5 acres on which we are building our home. He won't transfer it in our name since there's an oil well on the property which he makes money monthly from. He wants to do a land lease instead. He says we will get the land anyway when he passes. Im not sure I trust the situation. He says his friend who is an attorney says a land lease is a great idea. It might be good for him, but my gut is telling me no way. Any thoughts?

pamax1938

what can happen to the home when land lease term expires?

anon8012

On a land lease can i lease just an old house on 3 acres.

So not to be liable for the old house.

i have a deed on the property owned clear and free.

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