Ground Lease

 A ground lease also termed as ‘land lease’ only comprises leasing a plot of undeveloped commercial land to a tenant,  who then uses the property for development and use along with the duration of the lease.

During the period of a ground lease, the renter owns any kind of improvements made to the property, including the properties that are constructed on it. However, once the lease expires and is not renewed, the leaseholder gets ownership and control over all the developed properties on the land, who then gain added leverage on lease renewal.

Ground leases typically range for the longest duration, starting from 20 to 40 years for an initial term and often extending up to 99 years. 

A ground lease is cheaper for a tenant than leasing properties but can establish an added monthly cost for the long term for the borrower. Ground leases need tenants to make monthly rents, like other leases, and are characteristically net leases, meaning the tenant is responsible for paying property taxes, insurance, and maintenance expenditures throughout the term of the lease.

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