Property Q&A in Palm Springs>Question Details

Ron Bilton, Other/Just Looking in 83835

Is this Development currently in Discussion with the Lessor for Lease Extension? I understand 2042 is the current Expiry.

Asked by Ron Bilton, 83835 Fri Oct 26, 2012

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This question was asked from this property: http://www.trulia.com/property/3099431218-998-Village-Square…

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Ron, you should be aware that with only 30 years left on this lease a buyer is unlikely to find a lender willing to do a thirty year loan. Typically, lenders want 35 years left to do a thirty year loan. With only a few exceptions these leases are routinely extended. The major reason that many of these associations don't get renewed in a timely fashion is because the board members themselves need to initiate the negotiations. Many times board members are just unaware until problems with lending force them to pay attention to this issue. In most cases we see a $2500 to $4000 one time renewal fee that is charged to each owner for the extension. When the lease is being negotiated the property goes thru an appraisal process to help establish a reasonable lease fee. The extended leases almost always include a cost of living increase with specific guidelines. Many buyers worry that a lease won't be extended, but that has rarely happened in this area. So many of the associations are on lease land that a failure to renew one association would greatly effect values at other lease properties up for renewal. On Indian Land, the Bureau of Indian Affairs has been instrumental in encouraging seemless renewals to preserve local property values.
0 votes Thank Flag Link Fri Oct 26, 2012
No, the lease is not in discussion.My understanding is that they will be calendaring discussions but have not done so.
0 votes Thank Flag Link Fri Oct 26, 2012
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