Can someone here explain to me the ins and outs of owning a house (not mobile in any way) built in 1977, but not owning the land in which it sits?
Tax bill and county property record name the owner and specifies "Improvements only". The legal description identifies the schedule number of the land on which the home sits and a property search if that clearly shows the same description and a different owner.

This sounds a lot like owning a condo or something to me. However, it's not a condo. I don't see why anyone would purchase this or how they could ever liquidate it.

I know someone considering buying it, and have stated that I would advise against it.

Thoughts.

It's probably a ground lease. One party (Party A) owns the ground ad signs a ground lease with someone else (Party B) who pays a monthly or annual rent to the owner of the land. These types of leases are typically 50-99 years (often with extension options) with defined rent schedules. Party B then builds a structure that they own. At the end of the ground lease term Party A becomes owner of everything.

The benefit to Party B is a lower up front cost as you are effectively leasing the land rather than buying it. Party A gets to keep the land for generations while generating a regular income stream, or could borrow against the income stream if they wanted to.

It's much more common in certain areas (Manhattan, Hawaii, Indian reservations, govt owned land, etc.) and not very common for single family homes, but not unheard of.

Some houses in Traditions in CS are ground leases

Interesting. I get this as it sounds like an airport hanger in a county owned airport.

However, in this case, it s family property. One of the homes was "sold" to one of the so sons and his wife. However, it's the improvements only. Now they want to sell so they can buy a property elsewhere. I just don't see where there are many if any buyers for such a property. I'm assuming an access easement is obviously party of the deal since it's inside the larger property some distance from the road.

Also, it seems tricky at best to find an institution willing to finance this type of purchase.

Happy Easter to you all!

I'd take your findings in the CAD's office and cross check with the recorded documents in the clerks office.

Sounds like ground lease as others said. Many lakefront properties that are owned by USACE can be set up this way. It gives the owner of the land the right at some point to knock over the buildings. I've advised smart people NOT to buy for the reasons you point out but some have done it anyway and when he ground lease term is up they are at high risk of non-renewal and/or inflated renewal because they have so much in the improvements already.

I do think financing is obtainable.
A title run on the property should show the chain of title and if it's a lease or not.

We are on a private lake where we own a "share" of the corporation as our lot. Only property owners own shares & should the corporation ever dissolve, we'll own our lot/share. In the meantime, we only pay property tax on the structures/improvements and the Corporation pays for the land out of our yearly dues. Saves us a ton on lake front property tax.

Prior to purchasing, we had our attorney review it & we decided to go for it. Corporation has been around since the 40s.

This is called a leasehold property in the residential world. You can get conventional financing as long as the remaining lease is at least 5 years longer then the loan term. so, assuming a 30 year loan the lease has to have at least 35 years remaining.

https://selling-guide.fanniemae.com/sel/b2-3-03/special-property-eligibility-and-underwriting-considerations-leasehold-estates

All of this has been very helpful.

To be more transparent, this I am asking about this as it involves my daughter.
Her husband's family owns a roughly 160 acres in Colorado. On that property is a house our daughter's BIL (husbands brother) "owns". He and his wife are looking to sell it to my daughter and SIl, so they can buy another property elsewhere.
My daughter and SIL will be buying the improvements only as that's all the BIl owns to sell. The land itself still belongs to the parents of the family.
So, I can see where a lease for whatever term needed can be had to warrant a mortgage. I assume it also requires a legal easement to access the property too.

What cannot see is how this is a wise investment. First, I don't see where this property is sellable to any buyer outside the family. So, there is no way to liquidate the asset.
I imaging the parents don't deed the property over because of concerns about divorce etc and potentially slitting up their family land. While I can maybe understand that, this doesn't make a home purchase a wise idea when you have very little ability to sell it.

Thoughts?


ETA: I'm not trying to get into their business. I'm just trying to understand how this works and to see if I'm off base here with my thoughts.
If she were to ask, I'd give her my opinion.