Lease Land or Fee Land?

Posted

Half of the land in Palm Springs is owned by members of the Agua Caliente Band of the Cahuilla Indians.  Houses and condominiums built on these properties are sold subject to a long-term lease on the land.  We call this “Lease Land” here in Palm Springs, and some of the most iconic, architecturally significant homes sit on leased land.  Most of the leases are administered by the Bureau of Indian Affairs, and mortgages on leased land should be handled by lenders (preferably local) well-versed in these loans.

Not every bank will make a loan for a property on leased land, so be sure to check with your lender.  And those lenders who do provide these loans will require that the remaining term of the lease exceed the length of the mortgage by 5 years.  So, if you’re looking to get a 30 year mortgage, the lease must extend at least 35 years into the future.  If there are only 20 years left on the lease, then the maximum term of the initial mortgage can only be 15 years.  However, once the lease has been renegotiated and extended, the mortgage may be refinanced to a longer term if desired. 

We can provide a list of local lenders who specialize in providing loans on leased land.  

The other half of the land in Palm Springs, roughly in a checkerboard pattern, is owned outright by individuals or corporations and may be deeded to others.  These properties sit on what we call “Fee Simple Land” or just “Fee Land”, and are readily mortgageable by local and national lenders.

If you have any questions about Fee land or Lease land, or if you want to know if a property you’re interested in sits on Lease land or not, just email Greg! Greg@PaulKaplanGroup.com