what is a ground lease

A ground lease is a legal agreement between a landowner and a tenant who wants to develop a piece of property during the lease period. The lease defines who owns the land and who owns the building and improvements on the property. The tenant is permitted to develop the property during the lease period, after which the land and all improvements are turned over to the property owner. The lease period is usually long-term, ranging from 50 to 99 years. The tenant pays rent to the landlord and owns the building and improvements. The ground lease stipulates that the property owner will own any improvements unless the parties create an exception. The tenant is responsible for paying relevant taxes during the period of the lease. Ground leases are commonly used between commercial landlords and tenants who construct buildings on the property. They are also used by property developers who want to build on land they do not own. Ground leases can be advantageous for tenants because constructing a building is significantly less costly than buying land and then constructing a building. They can also be beneficial for landlords because they can assume all improvements once the lease term expires, which allows them to sell the property at a higher rate.