land leases or purchases?

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ocresident73_IHB

ocresident73_IHB

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I've searched the forum for this topic, but didn't find anything - so I apologize up front if this is a duplicate question. Back when Irvine was first being built (TRock, UP), buyers were given the option of leasing the land under the house from the Irvine Co. or purchasing outright (with TIC maintaining mineral rights in perpetuity). Many people apparently opted to lease (presumably because it was cheaper), but around the mid-80's, those leases came up for either a renewal or expiration. I remember many articles in the Times and Register at the time about homeowners up in arms at the time, saying that TIC was going to take their homes away. I don't remember for sure, but I think the resolution was that TIC renewed the leases for another 25 years or so.



So, my question is two-fold:



1. Is the lease vs. purchase option still offered in the new Irvine communities (and was it offered in recent years in places like Quail Hill and Woodbury)?

2. If I'm remembering correctly and the leases in the older parts of Irvine were renewed, will people who buy now, or have bought since the leases renewed in those areas, be in the same boat when the next lease renewal period comes up? Or, do new owners now own the land under their house?



Thanks to any and all that have insight on this issue.
 
[quote author="ocresident73" date=1251258764]I've searched the forum for this topic, but didn't find anything - so I apologize up front if this is a duplicate question. Back when Irvine was first being built (TRock, UP), buyers were given the option of leasing the land under the house from the Irvine Co. or purchasing outright (with TIC maintaining mineral rights in perpetuity). Many people apparently opted to lease (presumably because it was cheaper), but around the mid-80's, those leases came up for either a renewal or expiration. I remember many articles in the Times and Register at the time about homeowners up in arms at the time, saying that TIC was going to take their homes away. I don't remember for sure, but I think the resolution was that TIC renewed the leases for another 25 years or so.



So, my question is two-fold:



1. Is the lease vs. purchase option still offered in the new Irvine communities (and was it offered in recent years in places like Quail Hill and Woodbury)?

2. If I'm remembering correctly and the leases in the older parts of Irvine were renewed, will people who buy now, or have bought since the leases renewed in those areas, be in the same boat when the next lease renewal period comes up? Or, do new owners now own the land under their house?



Thanks to any and all that have insight on this issue.</blockquote>


When you purchase a new home in Irvine, you only receive a 99 year lease on the land and the Irvine Company retains ownership.



Also, Tupac is alive and well. He works at the cryogenic facility where they keep Walt Disney's frozen head. In his free time he kills giant sewer alligators in NYC.
 
I own a home in Irvine and it is not on leased land, and I've never heard anyone mention land leases at any of the homes we have looked at in many villages of Irvine. The only area I know where land leases still exist is in the UCI area - there is a house on Harvey Court that has been for sale forever, and one of the reasons it is not selling is it is on leased land. <a href="http://www.redfin.com/CA/Irvine/5-Harvey-Ct-92617/home/5752105">http://www.redfin.com/CA/Irvine/5-Harvey-Ct-92617/home/5752105</a> UCI also has a right to match any offer the owners receive on the property since this area is meant to be for UCI faculty.



Please chime in if anyone else thinks you don't own your land in Irvine!
 
If the land the property sits on is FEE SIMPLE it is owned land (the homeowner owns it), if it is FEE LEASE, you are leasing the land from someone else and you only own the house.

I know several parts of Huntington beach is like that. During the boom, people did not care and bought at crazy prices anyway.
 
[quote author="Chuck" date=1251267190]I own a home in Irvine and it is not on leased land, and I've never heard anyone mention land leases at any of the homes we have looked at in many villages of Irvine. The only area I know where land leases still exist is in the UCI area - there is a house on Harvey Court that has been for sale forever, and one of the reasons it is not selling is it is on leased land. <a href="http://www.redfin.com/CA/Irvine/5-Harvey-Ct-92617/home/5752105">http://www.redfin.com/CA/Irvine/5-Harvey-Ct-92617/home/5752105</a> UCI also has a right to match any offer the owners receive on the property since this area is meant to be for UCI faculty.



Please chime in if anyone else thinks you don't own your land in Irvine!</blockquote>




So where on that redfin listing can we tell if it is leased or not?
 
graph posted this comment to a thread I just discovered on this issue from March of '07 (sorry I didn't find it sooner):



"Urban legend. It may feel like renting because TIC has numerous controls of what you can and can?t do in the CC&Rs;. You would know if you were in a lease contract. Huntington Beach has a few places and you actually pay a lease fee to the owner of the land plus the mortgage on your property. The owner can raise the lease just like rent. Getting a loan on a land lease is not exactly easy either."



However, I know this is not an urban legend, as my parents are original owners in Turtle Rock and still have the original paperwork showing how much they paid for the land and how much they paid for the house. It even shows the option on the sales flyer (which they also still have). My dad still has a pretty clear recollection of the conversation he had with the sales staff in 1971, who tried to steer them toward a lease option because it was several thousand dollars cheaper. According to my parents, they were one of the few buyers in their neighborhood who went with the purchase option.
 
[quote author="ocresident73" date=1251288423]graph posted this comment to a thread I just discovered on this issue from March of '07 (sorry I didn't find it sooner):



"Urban legend. It may feel like renting because TIC has numerous controls of what you can and can?t do in the CC&Rs;. You would know if you were in a lease contract. Huntington Beach has a few places and you actually pay a lease fee to the owner of the land plus the mortgage on your property. The owner can raise the lease just like rent. Getting a loan on a land lease is not exactly easy either."



However, I know this is not an urban legend, as my parents are original owners in Turtle Rock and still have the original paperwork showing how much they paid for the land and how much they paid for the house. It even shows the option on the sales flyer (which they also still have). My dad still has a pretty clear recollection of the conversation he had with the sales staff in 1971, who tried to steer them toward a lease option because it was several thousand dollars cheaper. According to my parents, they were one of the few buyers in their neighborhood who went with the purchase option.</blockquote>


Like I said in that previous comment, you WOULD KNOW IF YOU WERE ON LEASED LAND. There is a clear difference in holding title to FEE SIMPLE land, and LEASED LAND. Try getting a Fannie/Freddie or FHA loan on leased land... I dare you... I triple dog dare you... because you CAN'T. It is very... very easy to find out if the land is LEASED or FEE SIMPLE, in other words do you own it... or do you lease it. A very basic title search would prove this. The main reason why I state this as a myth is because you CANNOT get a loan on LEASED land like you can a FEE SIMPLE owned lot. Plus, the only way I know of LEASED land is in huge blocks of land, that is made CLEAR that is LEASED LAND. In fact... it is impossible to get around the fact/disclosure that it is LEASED LAND, that I find it so hilarious that this keeps coming up.



If anyone... I mean someone... if just one person could provide me with a lot/home they believe is on LEASED land, then please do. Don't be surprised when you find out that it is really FEE SIMPLE land, and that their rights were limited. Or... the entire tract was zoned as LEASED land, and they pay a lease fee plus their mortgage, if they still have a mortgage... because they can't get one now if they wanted to anyway.



I could be wrong, but I am strongly convinced that I do know what I am talking about when it comes to FEE SIMPLE land and LEASED land. The legality of it all is very simple, that even 33% of RE agents will know the difference.
 
The life expectancy of a stucco house in Irvine is 99 years as specified in the disclosure. Upon expiration should the structure be torn down and the owner can rebuild something different on the vacant land like a 3CWG? or rebuild another ticky tacky replica per CC&R?



The people I have heard of inheriting an heirloom stucco box sell it and rarely keep it for the sentimental value. I wonder what would happen to these homes in 99th year? Would the price depreciate? Without much freedom due to CC&R the lack of expansion and remodel opportunity and lets fast forward to 2040 would these homes still be desirable still? Would tuscan be hot still or be dated like Garden Grove Ranch?



What I am trying to say is does it really matter if you own the land or don't own the land when you have NO freedom to add on or build a custom home on that land. What is the advantage of owning vs leasing land in a production neighborhood?



First you wont live that long to see it expires. Second, you kids and grand kids won't keep it. I suggest stop worrying about the land.
 
[quote author="bkshopr" date=1251303066]The life expectancy of a stucco house in Irvine is 99 years as specified in the disclosure. Upon expiration should the structure be torn down and the owner can rebuild something different on the vacant land like a 3CWG? or rebuild another ticky tacky replica per CC&R?



The people I have heard of inheriting an heirloom stucco box sell it and rarely keep it for the sentimental value. I wonder what would happen to these homes in 99th year? Would the price depreciate? Without much freedom due to CC&R the lack of expansion and remodel opportunity and lets fast forward to 2040 would these homes still be desirable still? Would tuscan be hot still or be dated like Garden Grove Ranch?



What I am trying to say is does it really matter if you own the land or don't own the land when you have NO freedom to add on or build a custom home on that land. What is the advantage of owning vs leasing land in a production neighborhood?



First you wont live that long to see it expires. Second, you kids and grand kids won't keep it. I suggest stop worrying about the land.</blockquote>


Irvine stucco boxes were designed to be just like Mission Impossible messages of the missions, only the Irvine homes will self destruct after years vs. seconds of the messages of the missions. Good thing my stucco box is built on land that I know if FEE SIMPLE, and I can have BK redesign a more stable structure on the site if I wanted. I just dunno if I can afford BK. He is worth it... but is the location worth BK?
 
[quote author="graphrix" date=1251300454]

If anyone... I mean someone... if just one person could provide me with a lot/home they believe is on LEASED land, then please do. Don't be surprised when you find out that it is really FEE SIMPLE land, and that their rights were limited. Or... the entire tract was zoned as LEASED land, and they pay a lease fee plus their mortgage, if they still have a mortgage... because they can't get one now if they wanted to anyway.

.</blockquote>




well, one exception that I know of in Irvine is university hills. land is retained by the state/UC. FHA will finance, but the UC system also has a loan pool that is ARM only.



there is also some tract in eastbluff of NPB that is on leased land, as well as one on balboa penninsula. these houses stand out because they are so inexpensive relative to their neighboring listings (like $400k versus $1M).
 
[quote author="freedomCM" date=1251332468][quote author="graphrix" date=1251300454]

If anyone... I mean someone... if just one person could provide me with a lot/home they believe is on LEASED land, then please do. Don't be surprised when you find out that it is really FEE SIMPLE land, and that their rights were limited. Or... the entire tract was zoned as LEASED land, and they pay a lease fee plus their mortgage, if they still have a mortgage... because they can't get one now if they wanted to anyway.

.</blockquote>




well, one exception that I know of in Irvine is university hills. land is retained by the state/UC. FHA will finance, but the UC system also has a loan pool that is ARM only.



there is also some tract in eastbluff of NPB that is on leased land, as well as one on balboa penninsula. these houses stand out because they are so inexpensive relative to their neighboring listings (like $400k versus $1M).</blockquote>


Yes, look at my example above in University Hills on Harvey Court. When I spoke with the agent about this house he gave me a long description of the house and then at the end of our conversation said "Now don't hang up now, but it is on leased land." There is also a property for sale on Beacon Bay in Newport Beach that is on leased land:http://www.redfin.com/CA/Newport-Beach/48-Beacon-Bay-92660/home/11909180

The text in the listing includes this - "Current home is a 2 bedroom/2 bath and there is a seperate 1 bedroom apartment over the detached garage. Subject to land lease. " This is a neat area - anyone know about this area and why the land is not fee simple? Thanks!
 
[quote author="bkshopr" date=1251303066]The life expectancy of a stucco house in Irvine is 99 years as specified in the disclosure. Upon expiration should the structure be torn down and the owner can rebuild something different on the vacant land like a 3CWG? or rebuild another ticky tacky replica per CC&R?



The people I have heard of inheriting an heirloom stucco box sell it and rarely keep it for the sentimental value. I wonder what would happen to these homes in 99th year? Would the price depreciate? Without much freedom due to CC&R the lack of expansion and remodel opportunity and lets fast forward to 2040 would these homes still be desirable still? Would tuscan be hot still or be dated like Garden Grove Ranch?



What I am trying to say is does it really matter if you own the land or don't own the land when you have NO freedom to add on or build a custom home on that land. What is the advantage of owning vs leasing land in a production neighborhood?



First you wont live that long to see it expires. Second, you kids and grand kids won't keep it. I suggest stop worrying about the land.</blockquote>


Can you elaborate on the 99-year thing above...what disclosure is it in? Also, what is stopping people in Irvine from tearing down their house and building a new house or adding on...is it just the HOAs/CC&R's? Does this also apply to neighborhoods that don't have HOAs? Just curious. Thanks for the info.
 
Graph - I don't think whether or not a potential or current owner knows if they are leasing the land is at issue here. I'm confident, as are you, that such information is found in the deed or other related paperwork. I simply asked whether such conditions still existed. And, contrary to your assertions, I think that the FHA and other lenders would in fact issue a loan for a property on leased land, assuming the timing were far enough out that no one currently involved in the transaction would be alive to care. I'll be curious to see if any of the IHB real estate agent posters have any experience in this regard.



In an effort to confirm the stories my parents had told me about their experience, I emailed my dad and he sent me the following reply:



"I far as I know when we looked at houses in the "Sierra" additions we had a choice of Leasing or buying the land. We bought the land, but most leased the land with renewals at 25, 50, 75 years which the lease amounts were adjusted. For our tract approx date: 25yr=1996, 50yr=2021, 75yr=2046. There was a big blow-up in Newport Beach area east of Fashion Island for houses built in 1965-1968 when 25 yr lease adjustment came due about 1990 with big jump in land lease. The irvine co. reduced the rent or an option to buy the land at that time. And it is not an urban legend."



Although I can't really go about asking my parents' neighbors if I can see their deed paperwork, I'm sure some of them are in fact leasing the land, per my dad's comments above.



To those that refer to the UCI property, I'm not sure that is a completely apples to apples comparison. The small number of custom homes built up there in the University Hills were kind of a set-aside project from the other faculty housing, which is all built on state owned UC land, so the normal rules of land ownership do not apply. I'm assuming one would be leasing the land from the state, not from TIC, as is the case with my original query.
 
Irvine still has some land leases. Not everyone in University Park exercised their options, and the area by Streamwood has some.
 
[quote author="graphrix" date=1251304421][quote author="bkshopr" date=1251303066]The life expectancy of a stucco house in Irvine is 99 years as specified in the disclosure. Upon expiration should the structure be torn down and the owner can rebuild something different on the vacant land like a 3CWG? or rebuild another ticky tacky replica per CC&R?



The people I have heard of inheriting an heirloom stucco box sell it and rarely keep it for the sentimental value. I wonder what would happen to these homes in 99th year? Would the price depreciate? Without much freedom due to CC&R the lack of expansion and remodel opportunity and lets fast forward to 2040 would these homes still be desirable still? Would tuscan be hot still or be dated like Garden Grove Ranch?



What I am trying to say is does it really matter if you own the land or don't own the land when you have NO freedom to add on or build a custom home on that land. What is the advantage of owning vs leasing land in a production neighborhood?



First you wont live that long to see it expires. Second, you kids and grand kids won't keep it. I suggest stop worrying about the land.</blockquote>


Irvine stucco boxes were designed to be just like Mission Impossible messages of the missions, only the Irvine homes will self destruct after years vs. seconds of the messages of the missions. Good thing my stucco box is built on land that I know if FEE SIMPLE, and I can have BK redesign a more stable structure on the site if I wanted. I just dunno if I can afford BK. He is worth it... but is the location worth BK?</blockquote>


That is smart having a home where you can tear it down and build a different home of your choice. I will design your home and even throw in the urinal in your garage.
 
[quote author="Chuck" date=1251333505][quote author="graphrix" date=1251300454]

If anyone... I mean someone... if just one person could provide me with a lot/home they believe is on LEASED land, then please do. Don't be surprised when you find out that it is </blockquote>
Yes, look at my example above in University Hills on Harvey Court. When I spoke with the agent about this house he gave me a long description of the house and then at the end of our conversation said "Now don't hang up now, but it is on leased land." TThanks!</blockquote>




don't bother looking at uni hills. it is only open to faculty/staff.
 
[quote author="traceimage" date=1251334382][quote author="bkshopr" date=1251303066]The life expectancy of a stucco house in Irvine is 99 years as specified in the disclosure. Upon expiration should the structure be torn down and the owner can rebuild something different on the vacant land like a 3CWG? or rebuild another ticky tacky replica per CC&R?



The people I have heard of inheriting an heirloom stucco box sell it and rarely keep it for the sentimental value. I wonder what would happen to these homes in 99th year? Would the price depreciate? Without much freedom due to CC&R the lack of expansion and remodel opportunity and lets fast forward to 2040 would these homes still be desirable still? Would tuscan be hot still or be dated like Garden Grove Ranch?



What I am trying to say is does it really matter if you own the land or don't own the land when you have NO freedom to add on or build a custom home on that land. What is the advantage of owning vs leasing land in a production neighborhood?



First you wont live that long to see it expires. Second, you kids and grand kids won't keep it. I suggest stop worrying about the land.</blockquote>


Can you elaborate on the 99-year thing above...what disclosure is it in? Also, what is stopping people in Irvine from tearing down their house and building a new house or adding on...is it just the HOA/CC&R's? Does this also apply to neighborhoods that don't have HOA? Just curious. Thanks for the info.</blockquote>


Irvine CC&R, HOA and lot size are the reason why residents can't add on to their home. What good is the land when you have no freedom to build a home on it. With the lease land you just pay for the physical cost of the structure. What does that mean? To buy a 2,000 SF IN Woodbury would only cost $375,000 on a land lease. You can pound nails, paint the walls purple on the inside and even grow an avocado tree if you want to. Live in it for 12 years until your son or daughter gets into Harvard and sell the place to the next family. Trust me no one grows old in these homes. The average stay for a stucco box is around 5 years before moving to a larger one.



The older neighborhoods in El Camino do have the space and the freedom to add on or tear down but who wants to spend money in a dated and a lack lustre neighborhood.



In the disclosure statement a stucco box is estimated a 99 years lifespan. The stucco screed is made from galvanized metal thiner than a watering can. For most home these metal reglets are next to planter with sprinkler heads and most are rusted in just several years. The entire stucco skin is sitting on this thin piece of metal at the bottom of a wall and when it disappears into rust particles the entire stucco wall is subject to deterioration. It is a disclosure to the consumers that the house may last up to 100 years. My Ginzu knife from the swap meet also comes with a lifetime guarantee too.
 
[quote author="freedomCM" date=1251348103][quote author="Chuck" date=1251333505][quote author="graphrix" date=1251300454]

If anyone... I mean someone... if just one person could provide me with a lot/home they believe is on LEASED land, then please do. Don't be surprised when you find out that it is </blockquote>
Yes, look at my example above in University Hills on Harvey Court. When I spoke with the agent about this house he gave me a long description of the house and then at the end of our conversation said "Now don't hang up now, but it is on leased land." TThanks!</blockquote>




don't bother looking at uni hills. it is only open to faculty/staff.</blockquote>


The particular property referenced here, and a handful of others surrounding it, were custom built estates that could be sold to non-faculty members/staff. Although, as previously mentioned, the land must be leased from the UC. I don't know how many of those original owners are still up there, but I don't think it's many. The rumor at the time was that those owners were mostly major donors to the university and a couple of other local wealthy families. It is true that any homes or condos below those couple of small cul-de-sacs are only open to UCI faculty or staff.
 
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