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Has Anyone Ever Dealt With a 100 Year Land Lease / Co-Op?

edited December 2021 in Other Investing
I bought a property in a very unique community that has 45 years left on a 100 year land lease. The property is part of a Co-op (think Condo) but our association doesn't own the land. We pay a hefty land lease fee on top of our normal HOA expenses.

It's my first year as an owner and I am questioning the logic of our board members regarding insurance premiums. None of these properties are bank owned... everyone is cash. Insurance premium increased 25% this year over last year's costs. To add insult to injury, the association needed a bridge loan to avoid payment penalties from the insurer. That loan charges 4.61% interest.

We are in year 55 of a 100 year lease which means that in 45 year the value of the condo goes to zero (for shareholders...remember I own a share of a Co-Op) and the land lease owner takes possession of all of our "property".

I understand the importance and need for basic insurance coverage (liability being one), but I would like find alternative ways to manage the risk of an aging property and its diminishing value due to the this land lease dynamic.

Anyone have any thoughts on this very unique real estate dynamic that I now call home (well at least until I am 107)?


  • My parents lived on a lake in the north Georgia mountains that was owned by Georgia Power Co. The power company owned most of the land bordering the lake and leased lots to homeowners for 100 years. That arrangement apparently hasn’t hurt residents because the cost of homes has skyrocketed over the years. My parents originally bought their home in the 1960s for about $14,000. My mom sold the house in the 1980s for about $350,000 and the same house is probably worth $1 million plus now.
  • edited December 2021
    Land-lease can be renewed at higher amount or land can be bought outright by property owners. It depends on the nature and state of properties. That the land-lease owner will send bulldozers to demolish properties at lease expiry doesn't make economic sense. But it sure is an added complication.

    Many of Manhattan buildings are on leased land. Rockefeller Center was on land owned by Columbia U. In 1985, Rockefeller Center paid $400 million to buy the land from Columbia U.
  • I have a friend who owned a condo (not a co-op) in Ocean Grove - a town where the land is owned by the Ocean Grove Camp Meeting Association of the United Methodist Church.

    Leases there are typically for 99 years. In the past few years there seems to have been a fair amount of commotion about the terms and rates of those leases. My friend sold before then, after being shocked, shocked, at the high NJ property taxes. No problems regarding prices or conducting transactions, though.

    I dug up a couple of articles about some of the more recent leasing problems there. These seem like worst case scenarios and not something one would typically be concerned about, at least if the lease is clear and you know what to expect.

    It seems that in 2016 the Camp Meeting Association tried to increase the rents for land occupied by commercial property. People organized to to sue to void the entire leasing scheme. The land owner backed down, but according to the article, at least one sale closed at reduced price because of the potential increase in the land rent. (The rent would have increased from $21 to $5K!)

    More recently (article below is from three days ago), the Camp Meeting Association started up again with increased rents and modified terms.
    The Camp Meeting Association has begun to issue new leases for commercial properties here that come with higher rent and reminders that its owners need to refrain from selling anything that would be considered incompatible with Christian values. ...

    The Camp Meeting historically ... and transferred the leases to new owners when the properties were sold. But it has begun to review and issue new leases for properties that aren't single-family homes when they change hands, offering terms that can include higher rent, fewer years and restrictions on activities it finds antithetical. ...

    The morals clause, she said, opens the door to interpretation.

    Yankee Stadium (the original) was owned by the Knights of Columbus and the land was owned by Rice University. (The Yankees leased the stadium.) This complicated matters in the 70s when Yankee Stadium was renovated.
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