I was reading about Citifield today, and apparently the Mets ( through a subsidiary) own the stadium and lease the land from NYC. How does this sort of arrangement work if the lease ends? If I lease some land and put my triple-wide on it, I can move the triple-wide if the lease isn’t renewed . The Mets can’t really move the stadium when the lease if the lease isn’t renewed for some reason . So what happens - does the landowner get the building or does the building owner have to demolish it or what?
The Mets have a 40-year lease that lasts until 2049. By that time, the stadium will be in need of complete replacement or serious overhauls. I believe that long-term leases are always the answer to this question. The lease is equal to the longest-term estimate for the lifespan of the building.
It’s quite possible that the terms of the lease require the land to be cleared (i.e. the stadium removed) and remediated to a certain condition before being handed back; it’s also possible that the lease allows for a renewal at the option of the Mets or the city or both; it’s also possible that the lease includes an option to buy.
Where I live, many properties are leasehold rather than freehold, with 999-year leases dating back to the eighteenth or nineteenth century and nominally subject to “ground rent” payable to the Earl of Pembroke or whoever. The Guinness factory in St. James’s Gate is held on a 9,000-year lease at £45/year.
Maybe ownership transfers to Bernard Madoff ?
(Sterling Mets famously received their investment with generous profit from Bernard Madoff… But being a ponzi scheme, Madoff had not actually made any profit to give… Other investors in the Madoff scheme claimed the profits back, to cover some of their losses.)
Where I live there were a lot (some hundreds) of new houses built in the 70s as leasehold properties with a Corporation owning the land and a nominal rent of around £50 a year.
In the 90s, the corporation sold the land to a private investor. The law required that the householders had to be offered first refusal and they were offered the freehold for a relayively small sum. (£250 from memory). The majority snapped it up as freehold houses are worth more than leasehold, but there were some who, for whatever reason, chose not to. Some said that since they were never going to sell, why spend the money; some didn’t understand and just ignored it.
After some statutory period the new owners upped the lease from £50 to £500 a year. The leaseholders squealed, but there was nothing they could do except buy the lease, which was now going to cost £thousands.
My house was originally leasehold with an annual rent of £5. The then owners purchased the freehold for £50 back in the 60s.
Salamanca, NY is an unusual example of this. Salamanca is a mid-sized town (although it’s legally a city) that is located within a Seneca reservation. The majority of people living in the town are not Senecas but only Senecas are allowed to own land. So most of the town’s buildings lease the land they’re located on. This had led to big controversies when the leases expire and new ones must be negotiated.
This is called ground rent. Read some of the articles from a Google search. It’s much more common in Great Britain than the U.S.:
https://www.google.com/search?q=ground+rent
As an interesting side note, all of real estate in Hong Kong works like this - Hong Kong land law does not allow for freeholds (i.e., full unrestricted property in land) by private parties, only for leases. Leaseholders are required to pay an annual government rent, based on the assessed current value, to the government.
It may vary from locale, but my experience is that any fixture attached to the land belongs to the land owner then the lease expires. The lessee may not detach (e.g. remove a house from the foundation) anything that was, at some point, attached to the land.
This does not seem that different from the way things work in the US. If a business stops paying property tax the land can be taken to pay the back taxes. In a lot of places the tax is based on some kind of assessed value of the land.
At common law, you can’t own a building separately from the land it stands on. The building is simply an improvement to the land, and it belongs to whoever owns the land.
As others have pointed out, a fairly common way of developing land used to be to let the land on a long lease at a low fixed rent, with the lessee covenanting to erect a building to certain specifications on the land. The lessee ended up with lease of land-with-building at a low, even nominal, annual rent. At the expiry of the lease period the landlord ended up with the unencumbered freehold of the the land-with-building. (Subject to the terms of the lease, or to any statutory intervention, which might give the lessee, e.g. a right of renewal of the lease or a right to buy out the freehold.)
In various common law jurisdictions there have been statutory interventions to allow, e.g. the development of blocks of flats on terms that purchasers can buy the freehold of a particular flat, without owning the freehold in the land or the subsoil. These statutory framworks are different from jurisdiction to jurisdiction, so there’s no general answer to the question “how does it work?”.
In Aus, the 99 year lease is a standard. I’ve never heard of anything longer. 99 year leases are normally for government land, or some kind of trust land, where the owner doesn’t, for various reasons, really have the option to sell.
For comercial development purposes, a 99 year lease is considered pretty much the same as freehold: 99 years is so far in the future that it doesn’t matter. Around where I live, they can’t or won’t sell off railway reservations, so 99 year leases are used.
It might boild down to similar results in practice, but the legal doctrine at work is conceptually very different. The government rent in Hong Kong is, conceptually, not a tax, even though it may be felt very similarly to the way a taxpayer feels the tax burden in the US. It is legally the rent paid for a leasehold.
Sometimes it doesn’t work. In my hometown there was a truck stop where one person owned the land and another owned the business. When it came to the end of the lease, the landowner would not renew the lease and the business went under. And, as stated above, the building reverted to the landowner.
A fellow I know was looking to retire in British Columbia. When the real estate agent showed him one particular lot, he mentioned it was a 99-year lease with a government department. He enquired which government department, and was told “Indian affairs.” He walked away from that option, dropping it like a hot potato. (At the time, the natives across Canada were resorting to road blockades to demand changes to leases and other contracts, even reversals of sales from the 1830’s and others signed earlier in history. While a stadium may not be serviceable 99 years later (after all, the Coliseum is in a terrible state for example) many houses are good for a century or longer. Presumably the resale value of a house diminishes if it is approaching its deadline with no stated renewal or resolution.
I recall a business where I lived that rented a space and spent a fortune fixing it up for an indoor miniature golf and snack bar, among other things. The entrepreneur had to jackhammer floors and re-cement them to install toilets and sinks and kitchen fixtures, for example. When the landlord decided to be a dick and terminated the lease two years later, the fellow removed all the improvements he could, even taking away the toilets and sawing off the bolts level with the floor, and the water pipes, etc. This he could do since those improvements were his, not part of the property as leased to him. In the end, the space could no longer be used without a lot of extra work and the landlord lost too.
The problem here, and I imagine in Australia, is that many of those 99 year leases are in their last decade. Leaseholders can have a big shock when the ground rent goes up to modern levels.
I was looking for a house in Colo Springs a few years ago and there was a situation where you would buy the house from the developer but the developer still owned the property. Needless to say they didn’t sell well.
“Indian Givers” - to be fair, the problem started when the Indian Affairs agents “acting on behalf of the natives” made sweetheart deals with some businesses to lease the land. The natives got screwed back then and are now recovering what was rightfully theirs. Also note that the Vancouver area has some of the most exorbitant real estate prices in Canada, so this is not as extortionate as it sounds. The homeowners got a cheap ride for decades (or the new owners didn’t dig deep enough before signing on the line and are paying for the mistake).