What is Land Lease?
A land lease is a type of financial arrangement in which the ground under a structure is leased, rather than sold to the builder, meaning that the land and the structure are owned independently. There are several reasons to enter a land lease contract, but it occurs most commonly when a real estate investor wishes to retain a piece of land, but not necessarily put energy into developing it.
In this instance, the investor might work with a developer to create a land lease contract, allowing the developer to build a structure and rent or sell it, with the understanding that the land is leased and does not come with the building. This type of arrangement is more common in urban areas, and is often associated with cooperatives or tenant-owned buildings.
An explanation provided by WiseGeek.com
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