What characterizes a Ground Lease?

A Ground Lease is characterized primarily as a lease for land use only, and it can also be secured by improvements made by the tenant on that land. This type of lease allows the tenant to use the land for an extended period, often several decades, while the actual ownership of the land remains with the landlord. The significance of this arrangement is that it enables the tenant to develop or build on the land without obtaining ownership of it. The improvements made by the tenant typically revert to the landowner when the lease expires, highlighting the unique structure of a Ground Lease.

In contrast, the other descriptions do not accurately capture this unique aspect. For example, an agreement for both land and buildings refers to a different type of lease arrangement where the tenant has rights over both the property and any structures on it. A lease that guarantees ownership implies that the tenant would have ownership rights that are not characteristic of a Ground Lease. Lastly, a short-term rental agreement for commercial use does not align with the long-term nature of Ground Leases, which are generally established for much longer durations to allow for significant development. Thus, the defining feature of a Ground Lease is its focus on land use, occasionally involving tenant-led improvements that do not change the ownership status of the land.