blogspot.com
Ground leases are a kind of long-term lease agreement in which a landlord can lease their residential or commercial property to a tenant who will make enhancements to the land. Ground leases prevail among business leases because they permit companies to operate on expensive realty residential or commercial property that they can't afford to purchase out right. In turn, landlords can benefit from improvements to the land and tenants can save cash on real estate expenses.

A ground lease is a kind of long-lasting lease agreement that permits a renter to build-and briefly own-improvements on the rented land. Ground leases prevail in commercial property and can usually last approximately 20-99 years. During the lease term, the renter generally constructs residential or commercial property for company use. At the end of the term, they'll transfer ownership of the residential or commercial property to the proprietor.
sakamotoproperties.com
A big franchise might utilize a to expand its organization into urban areas with high realty costs. This would permit them to construct a branch in a largely populated area without needing to acquire expensive land upfront.

Because the ground lease process frequently includes advancement, renters might require to take out loans to cover building and other related costs.

Two main kinds of ground lease contracts account for the threats associated with loans:

Subordinated ground leases put the loan lender's claims to the residential or commercial property above the property owner's. This produces a greater threat of losing the land if the occupant defaults, but permits the landlord to negotiate greater lease payments with the tenant. In turn, the tenant might be able to more easily secure a loan with better rates of interest.
Unsubordinated ground leases offer the landlord concern above the lending institution. This is a more stable and typical choice for landlords, but it might make it harder for tenants to secure a loan. As an incentive, proprietors might use lower rent costs to occupants who accept an unsubordinated ground lease.
FAQs

Who owns the building in a ground lease?

Generally, renters in a ground lease just pay lease on the land itself and keep ownership of any improvements they make, such as structures they build on the residential or commercial property. However, ownership of those enhancements transfers to the property manager when the ground lease expires.

What takes place if you default on a ground lease?

That depends on the context of the lease and which party defaults. In a subordinated ground lease, the property manager threats losing ownership of the land if a renter defaults on a loan. Conversely, the renter might possibly lose the building they developed if the proprietor defaults on financial obligations.

Who pays residential or commercial property taxes in a ground lease arrangement?

While it depends upon the lease contract, renters are normally responsible for residential or commercial property taxes, insurance coverage, maintenance, and repairs.

What's the difference in between ground leases vs. land leases?

Both ground and land leases rent out land to a renter. However, ground leases tend to permit tenants to establish the land, while a land lease might not.

Still have legal questions?

Our network of lawyers can help. Get unrestricted 30-minute consultations on brand-new legal subjects with our legal services strategy.

Discover more topics

A

- Affidavit
- Alimony
- Annual Report
- Appreciation
- Articles of Incorporation
- Articles of Organization
- Asset Turnover Ratio

B

- Beneficiary
- Proof of sale
- Bookkeeping
- Box 12 on W-2
- Breach of Contract
- Business License
- Business Owners Group (BOG)

C

- CapEx
- Capital
- Cease and Desist Letter
- Cease and Desist Order
- Civil Union
- Codicil
- Commis
- Community Residential Or Commercial Property State
- Contested Divorce
- Contingent Beneficiary
- Copyright Infringement
- Corporate Resolution
- Covenant Marriage
- Current Ratio
- Custodial Parent

D

- DBA
- Deed of Trust
- Defamation of Character
- Depreciation
- Disregarded Entity
- Dissolution
- Domestic Partnership

E

- EIN Number
- EULA
- Easement
- Estate Sale
- Ex Parte
- Executor of a Will
- Expense Ratio

F

- FEIN
- FIFO Method
- FUTA
- Fiduciary Duty
- Financial Statement
- First-Class Postage
- Fixed Asset Turnover
- Fixed Cost
- Food Runner
- Foreign Qualification
- Franchise Business
- Franchise Tax

G

- GAAP
- Gift Tax
- Goodwill
- Grantor
- Grantor Trust
- Gratuity
- Gray Divorce
- Gross Lease
- Gross Profit
- Gross Profit Margin
- Gross Profit Ratio
- Gross Sales and Net Sales
- Ground Lease

H

- Hold Harmless Agreement
- Holographic Will

I

- Incorporation
- Indemnification
- Independent Contractor
- Informed Delivery
- Intellectual Residential or commercial property
- Irrevocable Trust

J

- Joint Custody
- Joint Tax Payment
- Joint Tenancy

K

- K- 1

L

- LLC
- LLP
- Lady Bird Deed
- Landlord
- Lawyer
- Lease Agreement
- Ledgers
- Lessee
- Lessor
- Levy
- Liability
- Life Estate
- Living Trust
- Living Will

M

- MACRS
- Mailing Address
- Marginal Costs
- Medical Power of Attorney
- Meeting Minutes
- Miranda Rights

N

- NDA
- Net Asset Value (NAV).
- Net Assets.
- Earnings.
- Net Profit.
- Net Revenue.
- Net Sales.
- No-Fault Divorce.
- Noncompete

O

- Operating Agreement.
- Operating Cash Flow.
- Operating Expenses.
- Overhead

P

- P.O. Box.
- PLLC.
- PTIN.
- Pass-Through Taxation.
- Patent Attorney.
- Patent Troll.
- Per Stirpes.
- Pooled Trust.
- Postal Code.
- Pour-Over Will.
- Power of Attorney.
- Prenup.
- Primary Beneficiary.
- Principal.
- Priority Mail.
- Probate Attorney.
- Probate Court.
- Profit.
- Profit & Loss.
- Promissory Note.
- Residential or commercial property Deed.
- Public Benefit Corporation.
- Purchase Agreement.
- Purchase Orders (PO)

Q

- Quid Pro Quo.
- Quitclaim Deed

R

- Registered Agent.
- Residential Address.
- Return on Equity (ROE)

S

- S Corp.
- SG&A.
- Secretary of State.
- Service Mark.
- Single-Member LLC.
- Slogan.
- Sole Proprietorship.
- Statute of Limitations.
- Statutory Agent.
- Straight-Line Depreciation.
- Sublease.
- Successor Trustee.
- Surety Bond.
- Sweat Equity

T

- TOD.
- Tenancy in Common.
- Testamentary Trust.
- Total Asset Turnover.
- Brand name.
- Trade Secret.
- Trademark Search.
- Transactions.
- Triple Net Lease.
- Trustee

U

- Unilateral Contract.
- Unlawful Detainer.
- Utility Patent

V

- Vendors.
- Vicarious Liability.
- Virtual Mail.
- Virtual Office

W

- Warranty Deed.
- Wet Signature.
- What is gross profit?
- Will

X

- X-Inefficiency.
- XD

Y

- Yellow Dog Contract.
- Yield

Z

- Zoning Laws

Additional resources

- irs.gov.

• usa.gov