Leased land condos - what's the deal?

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CM_Dude_IHB

CM_Dude_IHB

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Excuse the ignorance and apologies if this has been covered before (I searched for related topics but didn't see any).



There are several properties listed in HB and CM which seem to be attractive condos on the surface. When I looked into them, I was told that I should pass, as they are leased land. Here are a few specific examples:



http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?property_type=CONDO&source=SOCALMLS&cKey=shb8nc25&page=1&listing_num=P618888&mls=MLS_SO_CAL



http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?property_type=CONDO&source=SOCALMLS&cKey=n4126q1c&page=1&listing_num=S524353&mls=mls_so_cal



Low price per square foot, but stupid HOAs. Nothing obviously on the listing indicating that they are on leased land.



Why would anyone buy a home on land that is leased? Anyone have any insight into this?
 
I was always told by the pros not to even consider leased land. It usually works out ok, but can actually have pretty disastrous consequences in extreme situations.
 
I was told the same thing as tmare, however my friends in Palm Springs have a nice condo on land leased from the Indians. The entire complex just renegotiated it for 50 more years....the land lease is paid for in their condo fees, which total $350.



The condo is appropriately priced about 50K less than units on "fee simple" (you own it) land. However, the complex across the street from theirs just "bought out" their lease and each unit had to pay 31K to do so.



I don't know if I'd consider it...but it's possible, especially that it's a new 50 yr lease. Lower price tag = lower property taxes.
 
tmare and Trooper - thanks! I wonder how easy it is to find out what the existing lease terms are, and when they are up for renewal. Seems kind of dodgy to me.
 
The HOA usually knows, I think. That's what the tenant was telling me when I was checking out a place in Costa Mesa.



What really drove me away from the place was that the seller was saying there was ~35 years left on the land lease, and the HOA was in the process of negotiating a renewal. I called and emailed the HOA 3x or so w/o a response. I'll stay away from that neighborhood ..
 
Find out who the lenders are for the neighborhood. They <strong>definitely </strong>know the lease terms.



ex. Countrywide closed an FHA loan on 7/25/08 (recently) on 1404 Tustin Ave in SA. $188,028 loan on a $195K purchase.

many more to choose from...



GL

-IR2
 
Be careful of any homes with land lease. There are these homes off of Tustin Ave and Fairhaven in Santa Ana that have been leasing their land for around $43/month for the last 30 years that are in a big lawsuit with the land owners because the land lease payment is being raised to $2000/month. This was all legally done under the terms of the agreement too. Apparently the lease expired in 2006 at the peak of the market, and the lease payment is based off the appraisals done that year.
 
lol! Thanks for a good laugh, I didn't know people did those tricks.



Here's a link:

http://209.85.141.104/search?q=cache:Z_mmjI59G-sJ:www.movoto.com/real-estate/homes-for-sale/CA/Santa-Ana/2600-N-Tustin-Ave-203_P635018.htm+Tustin+Ave+and+Fairhaven+in+Santa+Ana+land+lease&hl=en&ct=clnk&cd=1&gl=us&client=firefox-a
 
Please think long and hard before you purchase a home on leased land. If you must do it, make sure the lease has been signed and is for 20 years minimum. Also consider the difficulty you may have getting a bank to give you a mortgage, resale issues, rules the community may have on renting your home, etc. I could tell you a very sad story about a senior citizen complex on leased land in Santa Ana (Lake Park Homes), but just don't want to rehash those memories any more...
 
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