Commercial Loans: Dealing With Land Leases

I have had 3 requests in the last 6 months that have dealt with land leases. The projects varied from multifamily to theme park equipment and improvements. Although the improved structures were owned by the borrower, the land was leased rather than owned in some cases for up to 99 years.

Many lenders will not issue loans to borrowers who are leasing the land if the improved structure is the only collateral. When considering real estate we can certainly empathize with them. It would be hard to have a loan on a building that couldn’t be moved if the lease were to expire or default.

There are lenders who get comfortable with these land lease arrangements. They can be rare to find, even if you are an exceptional borrower. Dealing with land leases when you are purusing a commercial loan is another reason to work with a commercial loan broker. Through experience working on a range of deals, they know which lenders will work with you and your land lease.

Don’t spend months and months with a lender only to find out they can’t issue your loan because of a land lease. Let’s get to work right away.

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