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What Happens If a Ground Lease Expires?

If a ground lease expires without being successfully renewed, then any structures built upon or attached to the land reverts back to the landowner. This means a co-op or condo building and everything attached to the land will become the property of the landowner, even if the building was constructed and paid for by the tenant.

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How Long Are Ground Leases Typically?

Ground leases are traditionally 99 years in length because the original thought was that a person’s life was 99 years. Many ground leases also have two automatic renewal options of 20 years each, giving a typical ground lease a term of up to 140 years including the extensions.

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How Difficult Are Ground Leases to Renew?

Assuming your lease is close to expiration with no automatic extension options left, your ground lease may be very difficult to renew at reasonable terms if you are dealing with a private landlord. In this situation, the landlord really has you by the proverbial balls, and you are almost completely at their mercy.

The landlord knows that you will lose everything if the land lease expires and that he or she can simply take over your building and rent it out if nothing else. As a result, if the landlord agrees to renew your lease you can bet that it will be on very favorable terms to the landlord.

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Are All Landlords Equally Difficult to Negotiate With?

No. Much of the land in New York City is owned by various government entities such as the Battery Park City Authority or by non-profit organizations like the Catholic Church. In fact, the Catholic Church today remains the largest private landowner in NYC.

As you can imagine, negotiating a land lease with a government agency or a non-profit institution will be much easier than negotiating with a private landlord. In fact, government agencies like the Battery Park City Authority often have a singular mission of utilizing any lease payments solely to improve the neighborhood.

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How Do Coops Deal with Private Landlords When a Land Lease Expires?

Coop boards don’t have a lot of options when a land lease expires and the landowner is a private entity that cares about making a maximum profit. Some coop boards or even individual residents will threaten legal action in an effort to negotiate more favorable terms for a lease renewal. In this situation, the only thing a tenant can do is to convince the landlord that it will be more trouble to cancel the ground lease than to simply renew it.

In fact, some residents of co-ops with land lease expirations coming up have been known to buy their neighbors’ apartments at discounted rates in the wild hopes of securing a profit after they win a court battle against the landlord. In our opinion, it’s reckless to buy an apartment hoping that you’ll be able to get a favorable extension of a ground lease by suing the landlord.

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Disclosure: Hauseit and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction. The services marketed on are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).

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