According to Black’s Law, a property rental is a long-term lease of property. The lease lasted for as long as 99 years. Modern ground leases are frequently entered into for much shorter time frames, from five to 35 years. The term”ground lease” just describes the transaction, as it is merely the property that is leased. Any buildings built or enhancements made on the property revert to the landlord at the end of the contract.
Lease Conditions
A couple of the primary decisions made between the landlord and tenant demand how long the lease will last and how much the monthly lease will be. The tenant and landlord also agree upon fundamental problems, such as when and in which the obligations have to be made and what happens in the event a payment is late or missed.
Improvements
A ground lease arrangement normally permits the construction of a building on the property, paid for by the tenant. Additionally, it stipulates what’s going to occur to the construction in the expiration of the lease. It’s made clear that, even though the building was constructed at the expense of the tenant, it will legally belong to the landlord when the lease ends, unless otherwise agreed to upon at the contract. There are rare cases where the contract lays out a strategy for the tenant to be reimbursed the cost of the construction at the close of the lease.
Taxes and Maintenance Fees
A ground lease generally spells out that taxes and other fees incurred over the property and buildings throughout the lease period are the obligation of the tenant, and that the landlord won’t assume any expenses. These costs also extend to insurance and utilities payments, maintenance expenses and real estate taxes.
Sub-Let Policy
While it doesn’t need to, the lease arrangement may supply the tenant with the right to sub-let part of the property and to collect rent from the sub-tenant.
Conditions of Termination
Terms for conclusion of a ground lease may consist of expiration of the lease period, breach of agreement by either party, with the property for illegal purposes, premature surrender of their property by the tenant, willful destruction of their property by the tenant and default of lease or non-payment of taxation by tenant.