What defines a "ground lease"?

A ground lease is specifically characterized as a long-term lease agreement where the tenant is permitted to develop or build structures on the land while not owning the land itself. This arrangement establishes a distinctive relationship between the landowner (lessor) and the tenant (lessee); the tenant has significant rights over the property for an extended period, which can often range from 30 to 99 years.

In this type of lease, the landowner retains ownership of the land but grants the tenant rights to build and utilize the improvements. Typically, the lease requires the tenant to pay rent, which can be structured in various ways, possibly including an initial lower rent increasing over time due to the value added by the developments.

Other choices do not accurately capture the essence of what a ground lease entails. For instance, the first option describes a short-term lease that facilitates temporary use, which does not align with the long-term nature of ground leases. The third option focuses on the inclusion of utilities in rent, which is irrelevant to the fundamental definition of a ground lease. Lastly, the notion of a lease that can only be renewed once does not reflect the flexible renewal options typical in ground leases, which may include provisions for multiple renewals over the long term.