ground rent


Ground Rent

Perpetual consideration paid for the use and occupation of real property to the individual who has transferred such property, and subsequently to his or her descendants or someone to whom the interest is conveyed.

Ground rent agreements have sometimes required the payment of rent for a term of ninety-nine years, with renewal at the option of the party who pays it. In this type of agreement, the lessor retains title to the property. Large structures, such as hotels and office buildings, are ordinarily built on land under ground rent leases.The concept of a ground rent arrangement is English in origin. Its original purpose was an attempt by feudal tenants to put themselves in the role of lords over lower tenants. This was proscribed by a law passed in 1290 that made every tenant a subject only to the overlord.

In the United States, the only states where the ground rent system has been used to any great extent are Maryland and Pennsylvania. These agreements were initially popular as a method of encouraging renters to improve the property, since they could own the buildings while paying rent on the land. The courts enforced the ground rent agreements, and they gained popularity with investors who purchased and sold shares in ground rent agreements.

Although the ground rent system was not used in New York, the state courts did recognize comparable manorial or perpetual leases. A deed setting up a ground rent arrangement might indicate that it is to last for ninety-nine years, but since most agreements are automatically renewable, ground rents can last forever.

An obligation to pay the rent can terminate if (1) the individual entitled to receive rent forfeits such a right in a deed or other instrument; (2) the land is taken by Eminent Domain and the individual entitled to receive rent is compensated for the loss; (3) the agreement setting up the rent is breached and is thereafter unenforceable; or (4) the landowner also becomes the individual entitled to receive the rent or buys back the right to receive rents.

Under the Common Law, rents that were not demanded for a number of years could not be collected, since the law assumed that they had been paid.

The term ground rent is currently applied to a lease for land upon which the tenant constructs a building. While the landlord continues to own the land, the tenant owns all of the structures and pays rent for the ground only.

ground rent

rent reserved under a lease, usually for a long term of years, by lessor and payable by whomsoever will be the lessee for the time being; the lessee may assign his terms subject to the ground rent. Ground rent is often reserved in respect of building leases under which the lessee will erect buildings that, at the termination of the lease, will become, together with the land, the property of the lessor.

GROUND RENT, estates. In Pennsylvania, this term is used to signify a perpetual rent issuing out of some real estate. This rent is redeemable where there is a covenant in the deed that, before the expiration of a period therein named, it may be redeemed by the payment of a certain sum of money; or it is irredeemable, when there is no such agreement; and, in the latter case, it cannot be redeemed without the consent of both parties. See 1 Whart. R. 837; 4 Watts, R. 98; Cro. Jac. 510; 6 Halst. 262; 7 Wend. 463; 7 Pet. 596; 2 Bouv. Inst. n. 1659, and note, and Emphyteosis.

References in periodicals archive ?
SE[micro]nke Schwartz, who previously has worked as a certified tax advisor and auditor for Deloitte and KPMG, is also a co-founding managing partner of Continuum Capital and has been structuring ground rent investments and the EUR 300 mn securitisations of the German Ground Lease Finance SPVs with Michael Jung.
This press release includes forward-looking statements, including statements regarding (1) the timing of the Company completing the review of its change in ground lease accounting and determining the impact of such change on 2004 and prior years' financial statements; (2) the Company's expectations that any adjustments will not have an impact on cash balances, compliance with any financial covenant or debt instrument, or the current economic value of the Company's leaseholds and its tower assets; and (3) the Company's estimate that the non-cash adjustment will increase reported ground rent expense by approximately $1.
But as things stand people can't sell their houses at the moment till they pay off their ground rent.
He posed the question: "Should there be a ground rent and should that include an income stream that helps support the peace building and reconciliation centre?
The Hibberts, from Billingham, Teeside, paid pounds 40,000 for their home plus pounds 2,500 a year ground rent.
And Motherwell are understood to receive ground rent from Gretna on a match by match basis.
The money from ground rent and performance-based income will pour in over the next 15-20 years at the rate of around pounds 5m-pounds 6m a year, equating to more than 5% of the council's income.
The property is held leasehold for 99 years from June 6, 1973, subject to 25 yearly rent reviews of the ground rent which is currently pounds 4, 500 a year.
Scores of people there have refused to pay ground rent to the Lucan estate since the lord disappeared 24 years ago.
But if the freeholder is reluctant, or quotes an exorbitant sum, there may be no financial point in pursuing this - particularly if you have a long lease with a nominal ground rent, as the ground rent cannot be changed until the term of the lease has expired.
Among the successful lots was a freehold ground rent investment secured on a purpose-built development of 40 apartments in Lindley.
SCOUT groups across the North East claim they could go under if town halls hike the rate of ground rent.