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Define Ground Lease in Real Estate
Ground Lease:
"Ground lease" refers to a type of lease agreement in which a tenant leases land from a landlord or property owner, without any buildings or structures on it. The tenant typically pays rent to the landlord for the use of the land, and may be responsible for building any structures or improvements on the land.
Example:
For example, let's say a restaurant owner wants to open a new location, but doesn't have the funds to purchase land outright. The owner could enter into a ground lease agreement with a property owner, leasing the land for a specified period of time (such as 30 years) and paying rent to the property owner. The restaurant owner would then be responsible for constructing a building on the land, as well as maintaining it during the lease term.
"A Deep Dive for Real Estate Agents and Appraisers"
Ground leases are common in parts of the United States and around the world, particularly in areas where land values are high and the cost of purchasing land outright is prohibitive. In addition to Hawaii, ground leases are often used in urban areas, such as New York City, where land values are high and space is at a premium. Ground leases can be used for a variety of purposes, such as for commercial buildings, shopping centers, and residential developments. They can also be used for public purposes, such as schools and government buildings. Ground leases are often long-term agreements, lasting anywhere from 20 to 99 years -/+, and can be structured in a variety of ways, depending on the needs and goals of the parties involved.
"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"
A ground lease is land, bare and wide,
A tenant leases it, with nothing inside.
The tenant pays rent, to the owner, it's true,
And must build the building, without any ado.
Let's say a restaurant owner wants a new space,
But doesn't have money to buy it in haste.
They could lease the land, with a ground lease so grand,
And build a new restaurant, right on the land!
For thirty long years, the lease would last,
The tenant maintains the building, oh yes, a task!
But when the lease ends, the land goes back,
To the owner, the tenant's building, they must pack.