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Ground Leases and Land Acquisition Contracts.

  • ID: 2128402
  • Book
  • January 2011
  • Region: United States
  • 650 Pages
  • ALM Media, LLC
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Ground leasing can be just as profitable to a developer as purchasing land—sometimes more so. Landowners may also sometimes do better by leasing than by selling. Ground Leases and Land Acquisition Contracts teaches you what you need to know about this win-win relationship.

Ground Leases and Land Acquisition Contracts analyzes ground lease clauses in depth. You'll learn how to choose between a subordinated lease, an unsubordinated lease, and a land acquisition contract. You'll also learn how to negotiate lease and contract provisions that suit your needs, how to deal with the underlying business problems raised by all parties, and how to structure and draft these vital agreements from scratch. Annotated sample forms explain the origins of, and the reasoning behind, each provision.

The book also includes: essential coverage of the hidden risks of restrictive use clauses; rent increase provisions; clauses preventing assignability; and other language that can materially impair a project's market value and even result in disastrous losses. All too often, developers, lenders and investors learn the hard way that overlooking a single, seemingly innocuous clause can end up wasting massive amounts of money in construction costs, development expenses, principal and interest.

Ground leases come in many sizes and varieties, and it's easy to confuse them. Learn how to distinguish the kind of ground lease you need and find out what you need to know to prevent a defective ground lease from destroying the value of your investment or collateral. Whether you are making a strategic investment or lending decision or negotiating and drafting a ground lease, this comprehensive resource provides the crucial guidance you need.
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Chapter 1
To Buy or to Lease
- 1.01 The Ground Lease as an Alternative to Purchase
[1] The Roots of Ground Leasing
[2] Circumstances in Which Ground Leases Are Useful
[3] Subordinated and Unsubordinated Ground Leases
- 1.02 Comparing Financial Benefits
[1] The Cost of Development
[2] Occupancy Rental Rates
[3] Operating Expenses
[4] Cash Available for Debt Service
[5] Return on Cash Investment
[6] Amount of Loan
[7] Cash Flow
[8] Developer's Equity Investment
[9] Return on Cash Investment
- 1.03 Comparing Other Aspects of Selling and Leasing
[1] Why Sell?
[2] Why Not Sell?
[3] Why Buy?
[4] Why Not Buy?

Chapter 2
Development-Oriented Unsubordinated Ground Leases
- 2.01 Introducing the Development-Oriented Ground Lease
[1] Development-Oriented Unsubordinated Ground Leases Are Significantly Different from Other Ground Leases
[2] Competing Economic Interests Influencing Development-Oriented Unsubordinated Ground Leases
[3] Essential Objectives of Prospective Mortgage Lenders
[4] Essential Objectives of Occupancy Subtenants
[5] Special Objectives of Tenant-Developers
[6] Essential Objectives of Landowners
- 2.02 The Term
[1] The Main or Occupancy Term
[2] The Preliminary Term
[3] The Extension Term
- 2.03 Design and Construction
[1] Landlord Controls
[2] Design of the Project
[3] Demolition and Relocation Clauses
[4] Need for Financial Assurances
[5] Construction of the Leasehold Improvements
[6] Ownership of the Improvements
- 2.04 The Rent
[1] Rent During Relocation, Demolition and Construction
[2] Rent Clauses and the Concept of Mortgageability
- 2.05 The Leasehold Improvements
[1] Use Clauses
[2] Alterations Clauses
[3] Sign Clauses
[4] Destruction and Insurance Clauses
[5] Condemnation
- 2.06 Transfer of Interest
[1] Assignment
[2] Subletting
[3] Priority of Lien
[4] The Estate of the Landlord
[5] Estoppel Certificates
[6] Anti-Merger
- 2.07 Default, Termination and Dispute Resolution
[1] Termination as a Result of a Default
[2] Traditional Methods of Coping with the Termination Remedy
[3] An Alternate Approach to the Termination Remedy
[4] Termination as a Result of Bankruptcy
[5] New Lease Provisions
[6] Right of Election Under Bankruptcy Code - 365(h)
[7] Arbitration
[8] Exculpation
- 2.08 Notices and Interpretation
[1] Notices
[2] Amendments, Cancellation and Surrender
[3] Conclusions on Mortgageability
- 2.09 Sample Unsubordinated Ground Lease for Urban Property Adjacent to Other Property of the Landlord
[1] Introduction to Unsubordinated Ground Lease Form
[2] General Contents of Sample Unsubordinated Ground Lease Form
[3] Sample Unsubordinated Ground Lease Form

Chapter 3
Subordinated Ground Leases
- 3.01 What's a Subordinated Ground Lease?
- 3.02 The Pre-Construction and Construction Process
[1] Planning and Site Preparation
[2] Construction
- 3.03 The Term
[1] The End of Term Bonanza
[2] Contrasting Needs of Subordinated and Unsubordinated Ground Leases
- 3.04 The Rent
[1] Distinguishing Subordinated Ground Leases from Unsubordinated Ground Leases
[2] Lump Sum Payments
[3] Periodic Rent Payments
[4] Bonus Rent Payments
- 3.05 The Leasehold Improvements
[1] Use Clauses
[2] Alterations Clauses
[3] Demolition of Improvements Constructed by Tenant-Developer
[4] The Compliance Clause
[5] Repair Clauses
[6] Property Insurance
[7] Destruction
[8] Condemnation
- 3.06 Transfer of Interest
[1] Assignment
[2] Subletting
[3] Recapture
[4] The Obligation to Execute Accommodation Mortgages
[5] Encumbrances to Secure Debts of the Landowner
[6] A Landowner's Right To Sell
[7] Estoppel Certificates
[8] Recognition and Attornment
- 3.07 Remedies and Liabilities
[1] Termination as a Result of Default
[2] Alternatives to Termination
[3] Escrow Fund
[4] Reserve Fund
[5] Remedies for the Tenant-Developer
- 3.08 Subordinated Ground Lease Form
[1] Introduction to Subordinated Ground Lease Form
[2] General Contents of Subordinated Ground Lease Form
[3] Sample Subordinated Ground Lease Form

Chapter 4
Subordinated/Unsubordinated Ground Leases
- 4.01 Introduction to Subordinated/Unsubordinated Ground Lease Form
- 4.02 General Contents of Subordinated/Unsubordinated Ground Lease form
- 4.03 Sample Subordinated/Unsubordinated Ground Lease Form

Chapter 4A
Air Space Leases
- 4A.01 Introducing the Air Space Lease
[1] Air Space Leases in the Urban Setting
[2] Significant Clauses
- 4A.02 The Granting Clause
[1] Defining the Premises and the Appurtenant Easements
[2] Defining the Leasehold Estate
[3] The Granting of Clause
[4] Defining the Term of the Lease
[5] Delivery and Surrender of Possession
- 4A.03 Construction
[1] The Predevelopment Process
[2] The Design Process
[3] The Application Process
[4] The Construction Process
- 4A.04 Rent
[1] Rent Concepts
[2] Rent Offsets, Abatements, and Reductions
[3] Where and How to Pay Rent
[4] The Minimum Rent
[5] Impositions Rent
[6] Supplementary Rent (Sharing the Rewards)

Chapter 5
Buying Land for Development
- 5.01 The Role of Land Buying in the Development Process
[1] Who Develops Land?
[2] Phases of the Land Buying Process
[3] A Developer's Need to Avoid a Land Inventory
[4] Timing the Purchase of Development Land
[5] The Right to Cancel
- 5.02 The Land
[1] Describing the Land
[2] Representations
- 5.03 The Purchase Price
[1] Figuring the Total Purchase Price
[2] The Down Payment
[3] Escrow Provisions
[4] The Balance of the Purchase Price
- 5.04 Between Contract and Closing Date
[1] Fixing the Closing Date
[2] Rights of Entry
[3] Zoning and Building Permit Procedures
[4] Title Search Procedures
[5] Condemnation Proceedings
[6] Recording the Contract
- 5.05 The Closing
- 5.06 Exculpation
- 5.07 The Negotiation
- 5.08 Land Acquisition Contract

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Emanuel B. Halper

Emanuel B. Halper, one of the nation’s most prominent real estate consultants and lawyers, is the President of American Development and Consulting Corporation in Greenvale, N.Y. He is the founder and Chair of the ABA Real Property Probate & Trust Law Section’s Community Outreach Committee. He also chaired the Section’s Commercial Leasing Group and its predecessor for eight years. He is the author of Ground Leases and Land Acquisition Contracts published by Law Journal Press®. His vast experience as an author also includes writing regular columns for the New York Law Journal and Real Estate Review.

Mr. Halper, who graduated from the City College of New York and from Columbia University Law School, is a Distinguished Scholar-in-Residence and Visiting Professor of Law at Hofstra University School of Law. He was an Adjunct Professor of Real Estate at New York University's Real Estate Institute. Mr. Halper also served as Chairman of the International Real Estate Law Committee of the World Association of Lawyers. In addition, he was the recipient of the ABA’s Gavel Award, Hofstra University Law School’s Dean’s List Award, and New York University's Distinguished Teacher Award. He was also recently honored by the ABA with its Spirit of Excellence Award.
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