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Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 55467
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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I am interested in a 99 year lease condo on Florida.

Customer Question

I am interested in a 99 year lease for a condo on Florida. What are the pros and cons re this transaction?
Submitted: 2 years ago.
Category: Real Estate Law
Expert:  Richard replied 2 years ago.
Hi! My name is ***** ***** I look forward to helping you!
Can you provide me a bit more information? How many years left on the 99 year lease?
Customer: replied 2 years ago.
Have not entered yet. I am considering. We are at the start.
Customer: replied 2 years ago.
Did you get my response?
Expert:  Richard replied 2 years ago.
Thanks for responding. Yes, I did get it, it just took me a bit to type my response. I appreciate your patience. The upside is that the land lease should allow you to control the land at a cheaper price. The downside is that being that there is no ownership of the land, the appreciation of the condo is much more limited. That's because there is no residual land value based on ownership. Early in the lease, there is still value because there are so many years remaining on the lease, but as the years tick off, then the remaining lease value diminishes and the value of the improvements and the remaining useful life of the lease is all that remains. That prevents the appreciate that would accrue if you owned the land because as the land owner, at the end of 99 years, the landowner still has the land. BUT, for a condo owner, because the common elements are owned by association and not the individual unit owner, the condo owner probably does not care because a condo owner only owns between the outer walls and above the foundation and under the roof. Thus, the condo owner's upside is already limited because of no fee ownership in the land, and because a condo project is not really likely to still be there in 99 years, the condo owner is really buying the space, not the land.
Thank you so much for allowing me to help you with your questions. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as OK, Good or Excellent (hopefully Good or Excellent). I thank you in advance for taking the time to provide me a positive rating!
Customer: replied 2 years ago.
I understand the "down side". Having said that I am "ok" with a " LAND LEASE" SO LONG AS I HAVE ALL THE RIGHTS OF OWNERSHIP. That is I can rent the unit, sell my leasehold interest, etc.
Any problem with all of the above? Will I be able to get insurance?
Expert:  Richard replied 2 years ago.
This should not create any issues for you. These 99-year ground leases are fairly common and should prevent no impediments to financing, insuring, or other ownership issues for you.
Customer: replied 2 years ago.
Anything specific to condo associations in Florida that would create a deal breaker?Any insights into how to "structure" this sale?
Expert:  Richard replied 2 years ago.
These really close like any other transaction except that it's a land lease rather than a fee simple purchase. And, you structure the development and sale of condo units just as in a fee simple transaction except the disclosure that it's a land lease rather than an ownership.
Customer: replied 2 years ago.
Any issue for other condo owners?
Expert:  Richard replied 2 years ago.
In my experience, condo owners don't really care. They know they don't own the land anyway and the are not likely to be deep enough into the lease when they sell that will impact their sale price at all.

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