What Happens When a Land Lease Expires?

If a land lease expires without being successfully renewed, then the land and everything built upon the land reverts back to the landowner.

This means the condo or co-op building and everything else attached to the land belongs to the landowner if a land lease expires, even if the construction of the building was paid for by the tenant.



Ground leases on government owned land

For example, most people do not know that all of Battery Park City is on a land lease or that the neighborhood is partially built on new land excavated from landfill material from the construction of the World Trade Center.

As a result, the land in Battery Park City is owned and managed by the Battery Park City Authority, a local government agency.






Ground leases with not for profit organizations





Land lease buildings in NYC with private landlords




Land lease buildings are known to trade at a discount because of the uncertainty associated with lease renewals. But what happens when a land lease expires?






So what happens when a ground lease expires without renewal?





What Happens When a Land Lease Expires in NYC? A land lease building is a condo or co-op building that does not own the land underneath the building itself.




Note: A famous example of a ground lease building is the Empire State Building!

Why might land lease buildings in NYC be a good purchase?





1Lower monthly mortgage payments as a result of a discounted purchase price. Monthly maintenance payments are typically higher for a co-op building with a land lease than a comparable building that owns its land.

Pro Tip: Someone once famously said, you should buy or rent, but never do both. Perhaps there’s no need to be so extreme as to avoid land lease buildings altogether, but you should certainly be aware of the ramifications of buying an apartment in a ground lease building.

How can you check if a building has a ground lease?






Our Discretion, Your Advantage



14 thoughts on “What Happens When a Land Lease Expires?”









  3. Misha Pinkhasov



  5. Another land lease, 100 W 57th Street (Carnegie House) is an interesting one. Very competitive pricing for the location and unit sizes. I believe the reset is happening 2065. Any thoughts on those?

    1. Chris Oliver, Spokesperson at Hauseit®

      Indeed, there appears to be over 20 listings for sale in the building as of this writing, many of which are being offered for well under 1,000 price per square foot. While we cannot comment publicly on the interior workings of a building, if the reset is happening in 2065 as you say (this is unverified by Hauseit), then a prudent co-op board would want to renew the land lease soon. Why? Because some banks may not provide financing to potential unit purchasers if a building has a shorter remaining ground lease term than a standard 30 year mortgage. We’d love to hear more about this specific building, please feel free to share another comment here, or in our forum!

  6. Hong Kong Buyer

    It’s interesting that domestic buyers are afraid of land leases, whereas land leases are the norm in London and Hong Kong and buyers are used to it. It’s a common method for old families to hold onto the land over generations.

    A building having a land lease isn’t a reason to be afraid of it. It simply means there are some additional questions to ask on what is going on with this property during the due diligence period.

  7. Remember that land lease buildings are all co-ops, unless the landowner is the New York government. That’s why you only see land lease condo buildings in for example Battery Park City, because a NY government agency owns the land. Leasehold condos are simply not allowed under NY law.

    As an interesting segue, that’s why many condops are land lease buildings. They would rather develop a condo as that’s the trend, but can’t. As a result they style it as a condop, i.e. a co-op with condo rules.

  8. Land Lease Developer

    A few notable land lease buildings in NYC:

    303 East 57th Street, The Excelsior, is a ground lease co-op building whose land lease term expires in 2064. 2038 or 2028 are the next change dates for rent step-ups. It has really high maintenance which just went higher. But it’s a really full service building (i.e. you won’t even have to push an elevator button).

    215 East 96th Street is a land lease condop where the land is owned by the Islamic Cultural Center of New York, which operates a mosque next door on the adjacent lot. It’s a coop with liberal subletting rule (i.e. condo rules) and some investors like this building as a result.

    100 West 57th Street is an interesting case where the real estate family that owns the land sold it to another real estate family and not to the coop. Remember that the land lease is still binding even if there’s a change of ownership, so the terms stay the same. The rent reset date is in 10 yrs for this building.

    167 East 61st Street, Trump Plaza, is an interesting example where the coop corralled all the shareholders together to buy the land from the landowner. They paid $185mm for the land, which resulted in an assessment of ~$1mm per apartment. It takes a certain type of residency base to be able to come up with that kind of money!

    333 East 91st Street, The Azure, is an example where the land is owned by the Educational Construction Fund, a NYC governmental agency. Because NYC doesn’t like selling land, they did a long term land lease with a developer. This agency typically owns land for use for schools or educational offices, but will occasionally lease out unused land in this fashion. In this case, the developer was able to renegotiate the land lease with the agency (i.e. option to purchase or extend for 25 more years at expiration) because buyers were getting spooked otherwise.

    2 Fifth Avenue is an interesting case where the coop bought the land from the Rudin family in 2005, paying $29.25mm for the land. The coop financed the purchase and maintenance went up 14% due to debt service costs.

    252 East 57th Street is another example where the landlord is NYC’s Educational Construction Fund. The developer built a great building with lots of glass and great views. This one’s land lease expires on 4/30/2114 and is the longest land lease we’ve seen, plus it has an option to extend for another 26 years. Furthermore, PILOT payments are on a fixed schedule through 2035 and payments for ground rent are also on a fixed schedule through 2090 with change dates in 2090 and 2114.

    1. This is great information. Thank you for sharing. Where would you suggest is the best way to check who owns the land on some of these?

    2. Sonja Gosine, Spokesperson at Hauseit®

      Hi Stacy, you can always view the property tax bill of any real property on the New York Department of Finance website. For example, for condos you’d be able to see the property tax bills of individual units, as well as the owner’s names. If it’s a land-lease co-op, my guess is if you look up the street address (without unit numbers since they own all of it) you’ll see the land owner’s name and mailing address. As always, we recommend consulting one of our partner lawyers if you have any further questions: https://www.hauseit.com/real-estate-lawyer-partners/

  9. Diligent Lawyer

    What happens when a land lease expires? Well, if it’s not renewed then a leasehold interest is just there, ownership interest in a lease. Thus, just like my office lease, when it expires you’re expected to move out and leave everything as is. There is no automatic buyout and the building and anything attached to the property/land belongs to the landowner.

    However, that is a worst case scenario and I’ve never seen anything reach that critical of a stage in NYC. For example, did you know that all Battery Park City condo buildings have the same land lease expiration date in 2069?

    As a result, it’s rather inconceivable that in 2069, the Battery Park City Authority, a government agency beholden to the people, will refuse to negotiate and kick out all the voters in Battery Park City.

    In fact, some Battery Park City buildings have already gone through a rent change date. A few buildings got together with their government representatives and negotiated a compromise, and therefore got a smaller increase that was more affordable.

    It’s very likely that all BPC condo building land leases will get extended before 2039, otherwise banks won’t be able to finance and extend a standard 30 year mortgage.

    What are PILOT charges in Battery Park City condos?

    PILOT stands for Payment in Lieu of Taxes, and applies to leasehold condos only where the landowner is the government. The government as the landowner is exempt from paying property taxes to itself. However, the government wants to charge an equivalent of what property taxes would be if it wasn’t a landlease building, so they created PILOT.

    Fun facts: Brooklyn Bridge Park is very similar to Battery Park City. Remember that BPC wasn’t there before, it was land created from the debris from the World Trade Center construction, and built into the river.

  10. Land Lease Skeptic

    So how do land lease payments usually work? Well there’s usually an initial period of built-in increases in rent, such as a 3% increase per year that is predictable.

    However, after 25 years or so, there may be a rent change date, and the 3% annual increase doesn’t apply anymore. Instead, there might be a complicated formula to calculate the new rent, such as a percentage of the appraised land value built into a formula etc. Usually there will be a lower limit on how low it can go, but often there won’t be an upper limit on how high it can reset. This unpredictability is not optimal.

    Of course, land leases will vary by building, and I’ve heard of some land leases for example in Jackson Heights which will automatically renew for another 100 years with no payment exchanging hands at expiration.

    P.S. Remember that you can use ACRIS, and if not then your title company, to find out who the true landowner is! You’ll be able to find the original deed.

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