Full Version: ground leases
why are ground leases the least desirable loans for a lending company?
Simply for the fact that the ground is not owned. It brings in a third party, the lease holder, in the event of foreclosure or BK proceedings. It basically adds a third party to the loan request. The building is useless without the land and despite how iron-clad you may feel the lease agreement to be, there is still the risk of legal entanglement over it.
QUOTE(Commercial LO @ Sep 13 2006, 03:15 PM) 
Simply for the fact that the ground is not owned. It brings in a third party, the lease holder, in the event of foreclosure or BK proceedings. It basically adds a third party to the loan request. The building is useless without the land and despite how iron-clad you may feel the lease agreement to be, there is still the risk of legal entanglement over it.
why cant the lending company get a first priority perfected lien against the leased land and the building as collateral?
(sorry for the novice question, im just a junior loan review analyst)
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