A land lease property is one in which the land beneath the home (or in AZ, it might also be a patio home or town home) is owned by someone else. In Scottsdale, the majority of land lease fees are because developers convert a rental property to an owner-occupied units, but the original owners refuse to sell the land. You'd also need to check the CC&R's because sometimes the land lease fees are tied to a certain percentage of the new buyer home price.
The downside is that these properties are sometimes harder to finance and consequently harder to sell, possibly reducing their resale value. Often times, there is a monthly HOA (Home Owners Association) fee in addition to the land lease fee.
The upside is that properties with a land lease fee are usually sell for less relative to other nearby properties.
For example, a one-bedroom unit (894 sq. ft.) at Scottsdale House (4800 N 68th St, just across the street from Fashion Square) is listed for $99,900, but the land lease fee is $316 per month and the HOA is $396 per month. The HOA does take care of quite a bit, such as: Exterior Maintenance of Unit; Roof Repair; Roof Replacement; Blanket Insurance Policy; Water, Sewer & Garbage Collection; Front Yard Maintenance; Common Area Maintenance and Street Maintenance. However as you might imagine, someone who can afford a $100,000 condo probably doesn't have an extra $712 a month for these fees.
You'll need to "run the numbers" to see if the lower price makes sense when you add in the land lease and HOA fees. One other fee that comes up in certain parts of Scottsdale as well as the Biltmore Area is a "PAD" fee -- this is a "planned area development" fee. This fee is usually lower, the one I can think of off the top of my head is at Sandpiper (in McCormick Ranch) -- their PAD fee is only $180 annually.
Good luck with your home purchase! Yvonne