Ground lease
A long lease of the land under a home you own. The mechanism that takes land off the market permanently and makes the house cheaper to buy.
Every term on this page describes a document that exists. Ask to be shown it rather than told about it — the lease, the share certificate, the deed, the ground lease. Being shown it is the answer; being told about it is not. Then ask who has lent on this before, because a structure nobody has ever financed is a structure that has not been tested.
A ground lease separates a home from the ground it stands on. You buy the building; a community land trust or similar body keeps the land and leases it to you, typically for 99 years and typically renewable.
Because you are not buying the land, the entry price is lower — often substantially. That discount is the point of the arrangement rather than a side effect.
What is in it
A ground lease is a real contract and it covers more than rent. Expect to find:
- The term, and how renewal works.
- The ground rent — often nominal, sometimes not.
- The resale formula , setting what you may sell for.
- Who may buy from you, usually a household the trust has qualified.
- What you may build or change, and whose permission is needed.
- What happens on inheritance, and on default.
Every one of those is negotiated before you arrive and read afterwards. Read it first.
The two things people miss
The lease term must outlast your mortgage. Lenders will not finance a leasehold that expires near or before the loan does; the American secondary-market rules require the lease to run at least five years beyond the mortgage’s maturity date. On an old lease with 40 years left, that arithmetic starts to bite.
A model lease is worth more than a bespoke one. Recognised model ground leases exist precisely so that lenders can underwrite them without reading each one afresh. A trust that wrote its own lease may have done a fine job and will still be harder to borrow against.
Sources & further reading
- 1 Owning, leasing, renting — the four legal shells and the mortgage question
- 2 Fannie Mae — Community Land Trust Checklist — what a lender requires of a ground lease
Written by EcoHubs members, with AI assistance for drafting and editing, and reviewed by a person before publication. Facts are checked against the sources listed; anything we could not verify is marked. How this is written
Related terms
A non-profit holds land permanently and leases it to residents who own their buildings, separating the two so homes stay affordable after the first sale.
The rule that sets what you may sell a home for. It is why the home stays affordable for the household after you, and why your gain is capped.
Ownership where your return on exit is deliberately capped, so the home stays affordable to the next household rather than rising to market.