What is a “ground lease” often associated with in real estate?

A ground lease is specifically a long-term lease agreement that allows a lessee to use a piece of land for a specified period of time while not owning the land itself. This type of lease is often used in commercial real estate and can last for several decades, typically ranging from 30 to 99 years.

Under a ground lease, the lessee has the right to build or develop on the land, but the ownership of the land itself remains with the lessor. At the end of the lease term, any improvements made on the land typically revert to the lessor, which makes this arrangement particularly useful for investors and developers who wish to develop property without the upfront costs of purchasing land.

Ground leases are commonly used in scenarios where land is scarce or where it is more financially feasible for developers to pay a long-term lease rather than taking on significant debt to purchase the land outright.

This distinct feature of retaining ownership of the land while allowing the lessee to utilize it for development or other purposes clearly sets apart a ground lease from leases associated with residential properties or short-term commercial rentals, which do not usually involve land ownership considerations. Additionally, options for purchase typically come into play in different contexts and are not characteristic of traditional ground leases.