A very short answer to your question is _ IT DEPENDS! _ The lease will probably spell out what happens when the lease ends as you will see in this excerpt. I hope this helps. If I can be of assistance please call. We deal primarily with sale of Beach and Bank Owned Properties.
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H&J Property Managers, LLC
If you think that buying a property on leased land may be right for you, you should consider the following.
â€¢How much time is remaining on the lease? If the length of the remaining lease is shorter than you plan to remain in the home, it is imperative to find out what happens to your interest in the property at the end of the lease term. The lease term will also affect your ability to finance the home. It may be difficult or impossible to get a mortgage if the remaining lease term on the land is 20 years and you want a 30-year mortgage. Ideally, a lease that exceeds your potential remaining lifespan will protect your financial interests and your peace of mind. Of course, while you may not live in this home for the rest of your life, it's nice to have that option. And if you sell the home, a long remaining lease term will positively affect your sale price.
â€¢What are the terms of the surrender clause? Check the terms of the surrender clause if the lease will run out while you still own the house. If the lease expires and is not renewed, you will have to give up the use of the land upon which your home is built. Some surrender clauses stipulate that you also must surrender any improvements to the land (i.e., your condo, townhouse or house). Avoid ugly surprises by getting the information before you buy.
â€¢How much is the monthly land lease payment, how often does it adjust, and by how much? If there are HOA fees, ask the same questions about those. You want to make sure that you really will be saving money by buying a leased-land property, and that you won't one day be forced to move by escalating costs.
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