A tenant holds a ground lease and uses the leasehold interest as collateral for a construction loan to build on the site. What is this type of financing called?
Correct Answer
A) A leasehold mortgage, where the tenant's leasehold interest secures the loan
A leasehold mortgage uses the tenant's leasehold interest as collateral for a loan. This is common in ground lease situations where the tenant needs financing to construct improvements but does not own the underlying land.
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