A developer leases a vacant lot for 99 years under a ground lease. The tenant builds a 10-story office building on the site. At the end of the ground lease term, who owns the building?
Correct Answer
C) The landowner, because improvements typically revert to the landowner when the ground lease expires unless the lease provides otherwise
Under most ground lease agreements, improvements constructed by the tenant revert to the landowner when the lease expires. The tenant loses the improvements unless the lease contains provisions for compensation, removal, or lease extension.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
A leasehold estate grants the right to possess and use property for a defined period of time, without conferring ownership.
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- → A property manager of a 40-unit apartment complex budgets $75 per unit per month, or $3,000, into a dedicated account, and $36,000 accumulates over twelve months. The account is designated solely for foreseeable repair and upkeep needs such as exterior painting, roof patching and appliance repair, and not for the manager's compensation or for day-to-day operating costs. Which budget item does the dedicated account represent?
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A commercial tenant signs a triple-net (NNN) lease for office space. Under this lease, the tenant pays base rent plus which additional costs?
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A commercial landlord offers a new tenant a rent-free period of three months at the beginning of a five-year lease. What is this incentive commonly called?