An investor leases a vacant parcel for 50 years in order to construct an office building on the site. What type of lease is this?
Correct Answer
B) Ground lease
A ground lease is a lease of land alone, usually for a long term, under which the tenant builds and uses improvements during the term and ordinarily surrenders them at the end. Fifty years of vacant land taken in order to construct an office building is the classic pattern, because the rent buys the site and the tenant supplies the building. The other choices describe how rent or expenses are allocated, or who holds the leasehold, rather than a lease of unimproved land for development.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Community property is a system where property acquired during a marriage is owned equally by both spouses.
A freehold estate represents ownership of real property with an indefinite duration.
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
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