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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Related Topics & Key Terms
Key Terms:
Related Concepts
A life estate is a freehold estate that grants ownership rights for the duration of someone's life.
Real property is immovable land and anything permanently attached to it, while personal property (also called chattels) is movable.
Tenancy by the entirety is a form of co-ownership available only to married couples that includes the right of survivorship and protection from individual creditors. Neither spouse can unilaterally sell or encumber the property.
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