Land owners can pretty much do anything with the piece of property they own. The default mode is to use the land for personal purposes, say building a home or planting crops.
Another popular use of land is leasing. Land lease (or ground lease) is defined by this article as an “agreement that permits the tenant to use a piece of land owned by the landlord in exchange for rent.”
Many people have decided to put their areas of lease, so that others can use the land for their intended purposes and pay the owner for use of the property. It’s really a win-win strategy for both owner and tenant.
Unfortunately, failing to take note of the requirements and commitments surrounding land lease may lead to problems in either party. In order to conduct a smooth transaction between owner and tenant, let us discuss some tips on how to come up with a good lease for your land.
Determine the purpose of your land. A piece of land may seem fit for just about any purpose that its owner may think of, but can you imagine a farm land sitting in the middle of the business district? The importance of determining the purpose of your land cannot be disregarded.
Whether you have a residential lot, an industrial area, or hunting land for lease, make sure you know what your land is designed for.
Make sure you want to lease the land. Before putting your land up for leasing, check your intention. Start by determining the pros and cons of leasing land. Here are some of the benefits and dangers of leasing your land:
Pros
- You can save up on land payments, and even allow you to purchase another property.
- You have land ownership, even if you don’t develop it.
Cons
- Looking for renters may be difficult, and transacting with them may prove to be stressful.
- Maintenance fees may scale up especially when someone else is using your land.
Know the laws on land lease. Different states may have varying rules and laws on how to lease land. A typical set of rules for land lease includes rights and duties of both landlord and tenant. Take time to learn about these things to avoid any misunderstanding between you and the tenant.
Think about your future. As soon as you decide to have your land rented, it’s probably best to consider your future plans.
- Are you moving to a new home? If so, then you need to take the next steps to choosing your next home.
- Will you be using the leased land in the near future? You and the tenant must agree on the time frame of the contract, and if you’re open to contract renewal.
Be involved in the tenant’s land use. If you are the owner of the land set for lease, always keep tabs with what the tenant is going to do on your land. Make sure that they follow the conditions of land use stated in the lease contract, whether it’s for residential, industrial, commercial, or farming purposes.
For the latter, it may be a good idea to help farmer tenants in terms of comfortable paying schemes, access to helpful services and product distributors, and assistance in proper land use.
Leasing your land requires commitment of both you (as the owner) and the tenant. Make sure that both parties are able to fulfill their responsibilities in order to prevent any untoward incidents or severed relationships from happening.
Photo by Dave Robinson
Milo Senalle
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