Legal Definitions - ground lease

Definition: A ground lease is a long-term lease of land only, typically for 99 years. The rightful possessor of the land (lessor) conveys the right to use and occupy the land to another party (lessee) in exchange for rent. The lessee is responsible for any improvements made on the land, which usually revert to the lessor at the end of the lease term.

Example: A real estate developer leases a piece of land from the owner for 99 years to build a shopping mall. The developer pays rent to the owner for the land and is responsible for constructing and maintaining the mall. At the end of the lease term, the ownership of the mall reverts to the owner of the land.

Explanation: The example illustrates a ground lease where the owner of the land leases it to a developer for a long-term period. The developer is responsible for constructing and maintaining the mall and pays rent to the owner for the land. At the end of the lease term, the ownership of the mall reverts to the owner of the land. This type of lease is common in commercial real estate, where the owner of the land wants to retain ownership of the land while allowing another party to develop and use it for a specific purpose.