questionsanswered.net
Ground leases are a kind of long-term lease contract in which a property manager can lease their residential or commercial property to a renter who will make improvements to the land. Ground leases prevail among industrial leases because they allow organizations to run on pricey genuine estate residential or commercial property that they can't manage to buy out right. In turn, property managers can take advantage of improvements to the land and occupants can save money on realty expenses.

A ground lease is a kind of long-term lease arrangement that enables a renter to build-and briefly own-improvements on the leased land. Ground leases prevail in commercial realty and can normally last approximately 20-99 years. During the lease term, the renter typically develops residential or commercial property for company usage. At the end of the term, they'll move ownership of the residential or commercial property to the proprietor.

A big franchise may use a ground lease to expand its business into urban locations with high property expenses. This would enable them to construct a branch in a largely populated location without needing to buy expensive land upfront.

Because the ground lease procedure typically includes development, renters might require to secure loans to cover construction and other associated costs.

Two primary kinds of ground lease agreements 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 develops a higher danger of losing the land if the occupant defaults, but allows the property owner to negotiate higher rent payments with the renter. In turn, the occupant may be able to more quickly protect a loan with much better rates of interest.
Unsubordinated ground leases provide the proprietor top priority above the lending institution. This is a more stable and common option for proprietors, however it might make it more hard for renters to protect a loan. As an incentive, property owners may provide lower rent prices to tenants who accept an unsubordinated ground lease.
FAQs

Who owns the structure in a ground lease?

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

What happens if you default on a ground lease?

That depends on the context of the lease and which celebration defaults. In a subordinated ground lease, the property owner threats losing ownership of the land if a tenant defaults on a loan. Conversely, the occupant might possibly lose the building they constructed if the landlord defaults on debts.

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

While it depends on the lease agreement, renters are usually responsible for residential or commercial property taxes, insurance coverage, upkeep, and repair work.

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

Both ground and land leases lease land to a renter. However, ground leases tend to allow tenants to develop the land, while a land lease may not.

Still have legal concerns?

Our network of lawyers can assist. Get unrestricted 30-minute consultations on 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.
- Net Income.
- Net Profit.
- Net .
- 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.
- Postcode.
- Pour-Over Will.
- Power of Attorney.
- Prenup.
- Primary Beneficiary.
- Principal.
- Priority Mail.
- Probate Attorney.
- Court of probate.
- 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 earnings?
- Will

X

- X-Inefficiency.
- XD

Y

- Yellow Dog Contract.
- Yield

Z

- Zoning Laws
bloglines.com
Additional resources

- irs.gov.

• usa.gov