Use Clauses And Sublet Provisions In Ground Leases

A ground lease is both a conveyance and a contractual agreement between a landlord (the ground lessor) and a tenant (the ground tenant) pursuant to which the ground lessor, as the fee owner of the real property, conveys a leasehold interest in the property to the ground tenant subject to the terms and conditions of the ground lease. Ground leases are often entered into to facilitate the development of an unimproved parcel of land by the ground tenant and are therefore usually long-term leases (typically at least 50 years, often 99 years) given the time and costs associated with the construction and maintenance of the site improvements; and because at the expiration of the term, title to the land, and usually also the improvements thereon, revert back to the ground lessor. From a lender's standpoint, the remainder of the term of a ground lease should be long enough to amortize the loan and permit refinancing. The minimum rule of thumb is that the expiration of the ground