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Mark Waldron, Other/Just Looking in Escondido, CA

What should I know about land-lease arrangements?

Asked by Mark Waldron, Escondido, CA Thu Apr 9, 2009

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Mark, as Martha has pointed out, you are in essence renting the land until the lease expires. Also noted is the inverse appreciation (depreciation) occurring as the lease reaches expiration.
Some morgage sources will not provide financing for land lease properties.
0 votes Thank Flag Link Fri Apr 10, 2009
When a person owns a piece of land that is likely to be even more valuable in the future they may sell a land lease interest to another person who wants to develop the land. Usually it lasts for 99 years. A regular payment is made to the landowner. The cases I am familiar with are both homes and condos. As the lease period gets shorter the resale value decreases because when the lease ends the owner of the improvement has to vacate it. In some cases the seller will sell the land lease to the owner of the improvement.

It is also used when a developer of a condominium keeps the recreational facilities and leases it to the unit owners. This also keeps the value of condos lower. When possible the association buys the lease out and takes control.

My experience is in Ohio and Florida. In all cases when considering a property with a land lease you should consult a real estate attorney in the area where the property is located.

Martha Vasquez
Resource Realty
Web Reference:
0 votes Thank Flag Link Fri Apr 10, 2009
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