What makes a lease financeable?

Whether you are a borrower or a lender, if you are considering a loan supported by a ground lease, you need to be sure the ground lease is "financeable." A financeable ground lease includes either (a) "subordination" of the landlord's fee interest in the land or (b) provisions to protect the lender (as leasehold

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Fee Mortgage Provisions from a Ground Lease

Bexar Texas Fee Mortgage Provisions from a Ground Lease

Name: Bexar Texas Fee Mortgage Provisions from a Ground Lease
Brand: US Legal Forms
Rating: 4.64 (213 reviews)

Category:

Landlord Tenant - Commercial Leases

State:

Multi-State

County:

Bexar

Control #:

US-OL20071

Format:

Instant download

Description

This office lease form states that the lessor represents to the lessee that the existing fee mortgage is the only mortgage encumbering the land and the demised premises. The lessor agrees to cause the holder of the existing fee mortgage to agree to certain provisions.

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FAQ

Whether you are a borrower or a lender, if you are considering a loan supported by a ground lease, you need to be sure the ground lease is "financeable." A financeable ground lease includes either (a) "subordination" of the landlord's fee interest in the land or (b) provisions to protect the lender (as leasehold

The lease must be sufficiently long to allow the lessee to amortize the cost of the improvements it makes. In other words, the lessee must make enough profits during the lease to pay for the lease and the improvements. Furthermore, the lessee must make a reasonable return on its investment after paying all costs.

At a minimum, lenders will usually require that the term of the lease extend at least 10 years beyond the final maturity date of the loan. In order for a ground lease to be financeable, a lender will require that its mortgage be superior to any mortgages encumbering the fee title to the property.

In the classic ground lease, a developer leases property for a long term (usually 99 years) and constructs or substantially rehabilitates income-producing improvements, which allows the developer (the tenant under the ground lease) to realize income from its rental of that property to tenants of the improved property,

With a land lease agreement (also known as a ground lease), you purchase the home but rent the land. One of the main advantages is the lower price of this unique arrangement. One of the main disadvantages is that you will not be able to build valuable equity in the land on which you live.

Disadvantages: Leased land homeownership runs a risk of instability. Leases need to be renewed on a monthly or yearly basis.The rate for land-leases can be expected to rise over time.It's difficult to build and maintain equity with a home on leased land.

Under ASC 842, Leases, ground leases will be capitalized to the balance sheet through a right-of-use asset and lease obligation. The initial recognition and subsequent measurement will depend on the lease classification.

The benefits of a ground lease Ground leases allow landlords to retain control over their land while simultaneously receiving a steady income. If executed properly, they can be a win-win scenario for both parties. Land leasing also allows for flexibility and specialized financing mechanisms.

Everything on the land loses value over time and can thus be depreciated, but the land itself cannot. So, unfortunately, if you purchase a property that's ground leased to a tenant, you won't be able to depreciate the land for taxes.

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To record it through the mail, send the original document to the Bexar County Clerk's Office in the Courthouse. Filed of record in the real property records of Bexar County, Texas.Overview of Texas Housing Market. While Texans do not have a state income tax, they pay the price of homeownership with relatively high property taxes. Ground leases may also be referred to as land leases since the landlord is leasing out only the land. You do not need the beneficiary's permission to sell or mortgage the land. Your property is not subject to the beneficiary's debts. Mortgage pool balance, encumbers the leasehold interest of the related borrower in the related mortgaged real property and the fee interest of. Browse Bexar County, TX real estate. Listen as Mortgage Loan Officer Konni Williams explains how agricultural exemptions work and why it's important when purchasing property.

Bexar Texas Fee Mortgage Provisions from a Ground Lease

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FAQ

What makes a lease financeable?

Do you amortize a ground lease?

What makes a ground lease financeable?

Is a ground lease an operating expense?

What are the advantages and disadvantages of a land lease?

What are the disadvantages of a land lease?

Are ground leases capitalized?

What are the pros and cons of a ground lease?

What is the biggest advantage of a ground lease?

Can leased land be depreciated?

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What is a Bexar Fee Mortgage Provision in a Ground Lease?

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Are there any limitations to the Bexar Fee Mortgage Provision?

Can a Bexar Fee Mortgage Provision be modified or removed?

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