Ground leases are a type of long-lasting lease arrangement in which a proprietor can rent their residential or commercial property to an occupant who will make improvements to the land. Ground leases are typical amongst industrial leases due to the fact that they permit organizations to run on expensive realty residential or commercial property that they can't manage to buy out right. In turn, property managers can gain from improvements to the land and occupants can conserve money on real estate costs.
questionsanswered.net
A ground lease is a kind of long-lasting lease arrangement that enables a renter to build-and briefly own-improvements on the leased land. Ground leases are common in industrial real estate and can normally last up to 20-99 years. During the lease term, the occupant usually develops residential or commercial property for service usage. At the end of the term, they'll move ownership of the residential or commercial property to the property owner.

A big franchise may utilize a ground lease to broaden its service into urban locations with high realty costs. This would allow them to build a branch in a densely populated area without having to buy expensive land upfront.

Because the ground lease procedure frequently includes development, occupants might require to take out loans to cover construction and other related expenses.

Two primary kinds of ground lease agreements represent the threats connected with loans:

Subordinated ground leases put the loan lender's claims to the residential or commercial property above the proprietor's. This develops a greater threat of losing the land if the tenant defaults, but enables the landlord to negotiate higher lease payments with the tenant. In turn, the renter might be able to more easily protect a loan with better rates of interest.
Unsubordinated ground leases provide the proprietor concern above the lender. This is a more steady and typical choice for property owners, but it might make it more challenging for occupants to secure a loan. As a reward, landlords might provide lower lease rates to occupants who accept an unsubordinated ground lease.
FAQs

Who owns the building in a ground lease?

Generally, occupants in a ground lease just pay rent on the land itself and retain ownership of any improvements they make, such as buildings they build on the residential or commercial property. However, ownership of those improvements transfers to the proprietor when the ground lease ends.

What happens 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 landlord threats losing ownership of the land if a tenant defaults on a loan. Conversely, the occupant could potentially lose the structure they constructed if the landlord defaults on debts.

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

While it depends on the lease arrangement, renters are typically accountable for residential or commercial property taxes, insurance, upkeep, and repair work.

What's the distinction between ground leases vs. land leases?

Both ground and land leases rent land to an occupant. However, ground leases tend to allow occupants to establish the land, while a land lease may not.

Still have legal questions?

Our network of attorneys can assist. Get limitless 30-minute consultations on new legal subjects with our legal services plan.

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
- Entrpreneurs 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
- 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.
- Net Income.
- Net Profit.
- Net Revenue.
- Net Sales.
- No-Fault Divorce.
- Noncompete

O

- Operating Agreement.
- Operating Capital.
- 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.
- Order (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.
- Trade 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 revenue?
- Will

X

- X-Inefficiency.
- XD

Y

- Yellow Dog Contract.
- Yield

Z

- Zoning Laws

Additional resources

- irs.gov.

• usa.gov
  bloglines.com