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Community of leased land with custom homes.

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Doug Ellwood

Thread Starter
Freshman Member
Joined
Jan 15, 2002
This is a new one for me. Today I was asked to appraise a new construction of a detached single family home which is located in a new development referred to as a "Gated Adult Lifestyle" community. The land is a 35 acre parcel with imaginery lot lines (not sub divided), the members lease the land surrounding their home for $200/month as well as pay the maintenance fees and contribute to the reserve fund and Club house construction. My thoughts are if the owner decides not to pay the lease fees the home cannot be moved, the two elements are tied together permanently, one cannot exist without the other. Why would a bank lend under these circumstances. This may be common in the US, but in Canada its a new concept. Has anyone had a similar situation and how was it dealt with? Thanks in advance. [/quote]
 

xmrdfghap

Senior Member
Joined
Jan 15, 2002
Professional Status
General Public
State
Florida
The Catholic Diocese in Albuquerque had a relatively large area of property where the land was leased from the church and the homes were fee simple. I never had the opportunity to appraise there, but my understanding is that as the subdivision was large enough, all comps came from that same subdivision which would provide market data already adjusted for the unusual situation.

You might get Catherine Platt (a poster on this forum who lives in the Los Lunas area and is on the Albuquerque MLS) to ask around some of her colleagues in that area.

A second suggestion would be to check out the NAIFA chat room (www.naifa.com) and ask there. Ken Odenheim, IFAS is extraordinarily knowledgeable and would probably be familiar with the same development. He is active on the NAIFA chat rooms. He is from Las Cruces, which is a few hours south of Albuquerque, but distances don't mean as much there as they do elsewhere.

The only other thing I could suggest is developing a database of pair sales and grid out the land. I could never understand the purchase of property like that as well......but there is, apparently, a market for it.

Greg
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Doug; various things you can check- 1st being if you have trailer parks, see how they have set up their "Land Lease"; 2nd check town records and see if there are any Co-Op set ups, they also use a "Land Lease" system.
They are uncommon, but if you find one, you can then check the Lender to see if they're a large player or not.

We used to have a lot of properties set up in that way, by old time owners that handed the deals down to family members who alterted the new outcome. Now some PUD's are structured in a Co-Op fashion with and without stock, which becomes another issue. Also, some towns had not and have not the proper zoning (written), so they allow the builder/developer to write language, have the town attorney review it and make any changes they feel are necessary and then make it part of the zoning compliance.

Some Banks won't get involved and others get into it if they feel it is workable. Trailers that are on leased land in our area, could only be mortgage by used car banks, that would use a 10-15 year term - so the variations are many and not clear cut in my area.

Good Luck on your adventure :)
 

Doug Ellwood

Thread Starter
Freshman Member
Joined
Jan 15, 2002
Thanks for the responses, I will have to due some investigation. I'm up to a good challenge, perhaps I will become the land lease expert for the area. HMMM :D
 
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