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(Updated January 2016)

A land lease isn’t a standard home purchase—there are some pros and cons you need to weigh before signing on the dotted line. Topics covered in this updated field guide include 100% financing, subordinated vs. unsubordinated ground leases, key provisions of a financeable ground lease, use of ground leases with student housing projects and airports, and provision considerations in leasehold valuation. (M. Glick, Senior Information Specialist)

E - EBSCO articles available for NAR members only. Password can be found on the EBSCO Access Information page.

Ground Lease Definition

A long-term lease of land in which the tenant will erect improvements at its own expense. Not a desirable arrangement from the tenant's point of view, but sometimes the only way to gain access to extremely valuable real estate in an excellent location. The owner may be willing to sell, or the owner may have received the property by gift or deed (such as a church or university) and be prohibited from selling for some period of time. At the end of the lease term, the improvements become the property of the landowner.

Source: The Complete Real Estate Encyclopedia, (McGraw-Hill, 2007)

Ground Lease Basics

Own the Home, but Not the Land? What You Must Know About Land Lease Deals, (®, Mar. 19, 2015).

5 Tips for Your Next Ground Lease Investment, (Andrus & Morgan, Aug. 17, 2014).

Ground Lease Fundamentals in Commercial Real Estate, (PropertyMetrics, Aug. 4, 2014).

Top 10 Basic Terms for a Financeable Ground Lease, (McGuire Woods, Jan. 7, 2014).

Ground Control: Owners and developers unearth opportunities through creative land leases, (CIRE Magazine, May 30, 2012).

On Solid Ground, (CIRE Magazine, Jun. 14, 2011).

The ABCs of Ground Leases, (SIOR, 2nd quarter 2008).

Ground Lease 101, (Realty Times, Oct. 24, 2006).

Ground Control, (Commercial Investment Real Estate, May/June, 2006).

Ground Lease News

Ground Lease Approved for Chicago's New George Lucas Museum of Narrative Art, (Inquisitr, Oct. 18, 2015).

Envoy Announces New Program That Provides 100% Financing for Ground Lease Developments, (BusinessWire, May 14, 2015). E

Developers are Taking $90M Step Forward, (San Diego Business Journal, 2013). E

Fifth Third Ground Lease Sold for $1.3M, (McClatchy - Tribune Business News, Jan. 24, 2013). E

Public-Private Overhaul, (Multi-Housing News, Oct. 2012). E

Airport Industrial Park Plan Lacks Interest, (McClatchy - Tribune Business News, Mar. 30, 2012). E

Controversial Part of Ground Rent Law Overturned, (Baltimore Sun, Oct. 25, 2011).

Should You Buy Property on Leased Land?, (Investopedia, July 4, 2011).

Why I Bought in a Land-leased Building, (Brick Underground, Mar. 2, 2011).

Valuing & Financing Ground Leases

Adding Value Before Breaking Ground: Keys to a Financeable Ground Lease, (Lorman Educational Services, Jan. 8, 2014).

Leasehold Analysis In Valuation Assignments, (Appraisal Institute, Northern California Chapter, Oct. 29, 2013).

A Reality Check on Ground Lease Reversions, (Appraisal Journal, Winter 2009). E

Qualified Ground Lease Lenders Can Help Borrowers Save Time and Money, (CCIM, Sept./Oct. 2008).

eBooks & Other Resources

The following eBooks and digital audiobooks are available to NAR members:

The Art of Commercial Real Estate Leasing: How To Lease A Commercial Building And Keep It Leased, Kindle, Adobe PDF eBook

Commercial Mortgages 101: Everything You Need to Know to Create a Winning Loan Request Package, Kindle, eBook

Commercial Real Estate Investing: 12 Easy Steps to Getting Started, Kindle, eBook

Commercial Real Estate Investing: A Creative Guide to Successfully Making Money, Adobe PDF eBook 

Commercial Real Estate Investment, Adobe PDF eBook

Complete Book of Real Estate Leases, PDF eBook

The Complete Guide to Real Estate Finance for Investment Properties: How to Analyze Any Single-Family, Multifamily, or Commercial Property, PDF eBook

Getting Started as a Commercial Mortgage Broker: How to Get to a Six-Figure Salary in 12 Months, Kindle, Adobe PDF eBook

Books, Videos, Research Reports

Commercial lease law answer book, (Vendome Group, 2008). KF 593 C6

Lease guide: guide to writing a commercial real estate lease including green lease language, (BOMA International, 2008). HD 1384 T23

The leasing process: landlord and tenant perspectives, (Institute of Real Estate Management, 2008). HD 1394 M89

Managing and leasing commercial properties, (Wiley, 2007). HD 1394 AL2ma

Field Guides & More

These field guides and other resources in the Virtual Library may also be of interest:

Field Guide to Investing in Real Estate

Information Services Blog

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