Family Ownership Usually For Long-Term Ground Leases

Question: Thank you for your recent informative article about ground leases. I have a couple quick follow-up questions: Why are ground leases normally for 99 years? Is it against the law in England or the United States to have a 100-year lease?

Answer: The original idea for a ground lease was to keep title to the land in the family, even though the current family members were not occupying the land and just wanted income from the land. In other words, under the ground lease the ground tenant would have the right to occupy the land during the term of the ground lease, and would also generally have the obligation to pay real property taxes, maintenance, and other expenses for the land. The family members would just get “net” monthly or annual rent payments. The life expectancy of those family members was obviously less than 99 years. The children of the family members could then determine whether the 99-year ground lease should be renewed. For example, the 99-year ground lease for the land in the Biltmore area was owned in the name of the Mars Family Trust, and was originally a cattle ranch known as the Milky Way Ranch. Regarding your second question, why aren’t ground leases for 100 years instead of 99 years? Apparently, 100 years sounded too long!

Note:  A complex legal rule known as the Rule Against Perpetuities has a “lives in being” clause. The CC&Rs of the Desert Mountain community in North Scottsdale originally had a “lives in being” clause that was specifically based on the lives in being of Sandra Day O’Connor and John McCain, probably the two most famous Arizonans at that time.

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