Ground Lease

A Ground Lease is a long-term arrangement where a tenant occupies land but not any existing structures. Usually, the occupant erects or maintains improvements—like a building or parking facilities—while the underlying land remains under separate ownership. At the contract’s end, improvements may revert to the landowner, depending on the lease terms.

Key Points

• Separate Ownership: The occupant owns or controls above-ground construction, while the landowner retains the soil.
• Long Duration: Terms can stretch 20, 50, or more years.
• Lower Entry Costs: Tenants avoid buying land outright, focusing capital on structures.
• Reversion Clause: Builds or renovations might revert to the owner upon expiry if not otherwise agreed.

Ground leases facilitate cooperative usage, especially where developers prefer not to outlay capital for land, yet still want operational control over building improvements.