The following information provides a general overview of what Indian leased land.  A potential buyer of property located on leased land should carefully read that property’s lease and all supplements, attachments and addendums of any lease.  Neither  Tom or Gayle of Team DeWitt is an expert, and this overview is provided from information we have collected over time. We recommend that you check with an expert prior to buying property on leased land.

Land is laid out by sections in a checkerboard fashion throughout Palm Springs and also parts of Cathedral City and Rancho Mirage. Approximately every other section of this checkerboard is owned by the Agua Caliente Indians.  Most of the leases are owned individually by tribal members, and they are administered through the Bureau of Indian Affairs. The lease fee paid covers long term use of the land. Although a buyer does not own the land, the lease gives him or her  the legal right to use the land for the length of the lease.   This concept is similar to that of condo ownership where usually you do not own the land it sits on, and you pay fees to the condo ownership association.

Though fee simple (where you own the land) is the standard type of ownership in California, there are some benefits to buying a home, condo or lot located on leased land.   The primary difference between buying and leasing land is the potential reduction in cost of a home. By getting a land lease, the homeowner has use of the land without the capital outlay. The buyer can usually afford a more luxurious home for less money.  It’s been our experience that homes on lease land generally sell for 15% to 20% less than a similar home built on fee simple land.   The value of lease properties and fee simple properties appears to have increased in the same proportion as other homes in their areas locally.  We believe from experience in selling both fee simple and leased properties is that the condition in which you keep your home has far more influence on its resale value than whether or not it is  on leased land.

The maximum lease period is 65 years.  Historically, leases are getting extended when they get below 30 years.  A land lease must be renewed periodically. If there is a mortgage on the property the lender may require the lease period span the term of the mortgage plus about five years. Your lease payment may be increased to reflect the current lease market when it is renewed.  The lease payment is similar to an HOA fee. You will still be required to pay property taxes and the payment is not tax deductible.

You can give your home to heirs or sell the property when it is on leased land just as easily as on fee land. Consider that most residences change ownership about every five years. A $300,000 buildable lot in Central Palm Springs may cost $2000 a month in a mortgage arrangement and $200 a month in a lease agreement. There can be considerable savings involved in a lease versus fee transaction.

Be sure to find out if a property you are considering buying is on leased land and what the terms of that particular lease are. And most importantly, as a home buyer you need to read and make certain you understand the terms of the sublease.