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All Land is Not Equal In Palm Springs CA |
A leasehold parcel of land means that you do not own the land you are only leasing it from the actual owner. Even if there is a structure on it, that you hold title to, the lease payment only entitles you to the use of the land – subject to the terms of the lease - and not actual ownership. (When you own the land this is called “Fee Simple ownership”)
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In Palm Springs, Cathedral City and parts of Rancho Mirage California up to 50% of land is lease land. This is important when looking at property because land value can’t be factored into the value of the property. Typically this means that the price of a home located on lease land will look more attractive than the same home built on fee land, where you do have to factor in the value of the land.
All leases are different and terms and conditions must be checked carefully during the buying process. One major provision in many leases is that “leasehold improvements” are sometimes made permanent fixtures to the land. You may not remove them at a later date without the express consent of the leaseholder. In some cases this may extend to other improvements such as landscaping, awnings, trellis, and gazebos – anything permanently attached to the “leasehold improvement”.
IMPORTANT: Not all lenders will loan on lease land – some who will, will not loan if the lease is short. If you need
Other Considerations with Lease Land:
-If you are financing the purchase the value will only be figured on the structure and not the land itself.
-What are the terms for lease land payment increases?
-What, if any, are the preset renewal terms and conditions
-Homeowners insurance does not factor in land value so this is unaffected
-You will be paying property tax on the value of the land. The IRS has ruled that the person who enjoys substantial use of the property pays the tax.
