Leasing land vs. owning it

[cbc58]

I ran into a situation where someone is willing to lease me thier land vs selling it.  99 year lease with a flat upfront fee of 14k and guaranteed renewal of another 99 years for $1... forever.  This is part of a larger lot but seperated by a driveway so it is essentially it's own parcel.  Zoning won't allow them to sell without putting in a roadway which they don't want to do.  Building permit guaranteed.

Would anyone consider doing this vs. buying if the price is right?  My concern would be resale but would that really detract from someone buying if the lease was essentially perpetual?

[Squirl]

This is not legal advice and I would contact an attorney to draft the lease. 
How big is it?
Who is responsible for the taxes?  Normally on a lease the owner is responsible for the taxes, this could add up to well over 14k for 99 years, especially if you put improvements. (building)
What happens if the taxes aren't paid?
What happens if the lessor eventually sells the property?
What happens when the lessor dies and it passes to his estate?
What happens if the lessor takes out a mortgage?
What happens if there is a foreclosure?
What happens if a lien is filed against the property?
What happens if a sheriff's sale occurs for unpaid taxes, bills, or liens?
What happens when you die?
Normally lessee's have their rights transfer but you have to get it detailed in righting under the statute of frauds.  Also your states laws would come into play.  You would have to make sure your lease rights are transferable or you would never be able to "sell" it.
Do the improvements revert to the lessor  if the lease is broken or when the lease ends? Does the lessor have to pay fair market value for those? 
What happens if someone moves for quiet title and the person doesn't have the right to lease the land in the first place?  I don't believe you can get title insurance, because you aren't getting the title.

I have personally seen almost every one of these issues come up before for someone. Don't be surprised if you have to spend a lot on a lawyer some day.  Add in the cost of a lawyer to research and add language to the lease for all of these scenarios and any others I can't thing of.

[cbc58]

Hi-

All good questions.  Lot is only 1/2 acre.  To buy the lot would cost 40k.  These are the same things that I wondered and I have a call into an atty.  I think a good solid recorded lease may suffice.  Pretty sure that the lease terms run with the property and can't be revoked once recorded as long as all terms are met.

This is a stand-alone lot but technically not because of subdivision regs.  It's a risk but may be worth it if the price is right and all the t's crossed and i's dotted.  The foreclosure/tax sale is what worries me the most and may be the killer.

[John_M]

I'm just wondering why someone would want to lease land with a deal like that?

[MountainDon]

To me, the only leasing of land that makes any sense is to run livestock, grow crops, or strip mine.   

[diyfrank]

I know some who have purchased land on  a 99 year lease out on a reservation. It doesn't seem to bother them that it will need renewed.
I think I would pass.  Either way, 99 years is long enough to occupy

[cbc58]

I think they need $$ and are looking to use an asset they have to generate some quick cash.  This is essentially perpetual ownership for a flat fee and they would sell it outright if not for zoning/county regs that require a major road upgrade and utilities.  This would be perfect for a vacation trailer... but a year round cabin is questionable.

FYI, someone told me that some areas view a 99 year lease the same as ownership for zoning/subdivision  purposes.  So they've cut out that loophole for people trying to work around the system.  Something to keep in mind if you are ever looking at a 99 year lease.  This has been an education.

I guess 150 years ago this was very popular... leasing land instead of buying.

[muldoon]

I know some who have purchased land on  a 99 year lease out on a reservation. It doesn't seem to bother them that it will need renewed.
I think I would pass.  Either way, 99 years is long enough to occupy

well, that assumes the landowner keeps the place for 99 years.  He could be foreclosed on or stop paying taxes and have it to to the sherrifs sale.  Renters losing their houses to homeowner default is happening everywhere these days. 

Obama did pass the "Protecting Tenants at Foreclosure Act of 2009." This legislation provided that leases would survive a foreclosure -- meaning the tenant could stay at least until the end of the lease, and that month-to-month tenants would be entitled to 90 days' notice before having to move out (this notice period is longer than any state's non-foreclosure notice period, a real boon to tenants).

An exception was carved out for the buyer who intends to live on the property -- this buyer may terminate a lease with 90 days' notice. Importantly, the law provides that any state legislation that is more generous to tenants will not be preempted by the federal law. These protections apply to Section 8 tenants, too.

--
99 sounds like a long time, but then again it could be just 90 days too.  I damn sure would not trust any law to stay the same over a period of 99 years.  so take that lease with a grain of salt. 

[Squirl]

I have seen that happen to people.  If anyone spends time regularly down at a court house, or buys foreclosed or sheriff's sale properties, they will see it happen pretty regularly.  Also if you make $60,000 of improvements to the land, that could all be lost in as little as 90 days. Improvements could include items such as Septic, Well, Cabin.  Sorry, this is my field so I hear people say "that could never happen to me"  all the time.  Then I see it happen.  Suppose your neighbor passes away suddenly and his heirs let his property go.  Someone could slip and fall on his property, sue his estate, get a judgment, and force the land you leased to sheriff's sale.  Many leases don't survive a sheriff's sale or tax lien sale, it can depend on your state, county, or town's local laws.  That is why it would take a lawyer a lot of time to draft a complicated lease agreement and research your local laws.  This usually costs a lot of money up front.

[cbc58]

Where would I find these regs. on a county level?   State of NC, Buncombe county. 

[devildog]

Here's .81acres in bucombe co for $15,000 you could own.                                                               ://www.realtor.com/realestateandhomes-detail/25-Renee-Rd_Asheville_NC_28806_1113140674                                                                                                                                     There are others on realtor .com for alittle more ,maybe make an offer on for less. Something about putting money on something you dont own makes me nervous. Good luck Darrell

[ScottA]

Leasing is very common in England where the gentry own most of the land. They buy and sell by transfering the lease but the land still belongs to some lord somethingorother.

[devildog]

leasing must be popular in asheville. I was looking at land on ebay and came across this
http://cgi.ebay.com/1-2-Acre-wooded-lot-of-land-in-Asheville-NC_W0QQitemZ140373294848QQcmdZViewItemQQptZLand?hash=item20aee67f00

[cbc58]

Just to update: - there are soooo many issues of concern with leasing, but most seem to be able to be overcome with a well-written lease.  The thing that kicked this out for me is that a lease may not survive a tax or foreclosure sale.  So the parcel that the lease is on could get sold via forced legal means and then the lease cancelled... making everything you had built the property of the new owner.  There are some restrictions as to "principal residence"... but we are looking for a vacation spot, so the laws don't protect you in that instance.  Not worth the risk unless you put a mobile home or movable structure on the land... and even then you could lose the non-structure improvements you invested in.   Also a big problem if you want to sell the thing cause it really limits the buyer pool who might take the risk.

[Solar Burrito]

I lease 5 acres in Washington State. The lease is from Tacoma Power and it has 58 years left in a 99 year lease. It will be renewed but even if it isn't the price is right and I will be 88 if it does expire. It works great for me. Otherwise Tacoma power couldn't do anything with the land.

[Pritch]

I lease 5 acres in Washington State. The lease is from Tacoma Power and it has 58 years left in a 99 year lease. It will be renewed but even if it isn't the price is right and I will be 88 if it does expire. It works great for me. Otherwise Tacoma power couldn't do anything with the land.

SB,

Is this around Lester?  I'd be interested in any land leasing info that you might have.  I also like that plan you have chosen and am interested to see your progress.