A land lease community is a housing development where the homeowners lease the land where they place their homes. Normally the homes in a land lease community are manufactured homes or mobile homes. In exchange for a lease payment, the landowner provides infrastructure and facilities for the community. Local municipalities assess fees and taxes for the land just like any property, and the owner makes the tax payments directly to the taxing municipality.
Land Lease Fees
Land lease fees vary greatly depending on the location of the land. According to the “Principles of Real Estate,” historically these communities are in less than desirable areas. However, this has started to change. Today spaces in choice land lease communities can cost upwards of $1,000 per month. The monthly lease fee normally covers services such as a security gate, common areas, garbage collection, streetlights and landscaping. Generally, land lease fees do not cover utility bills such as electricity, cable, telephone, water and sewer.
Types of Homes
The landowner will determine the types of homes allowed on the land and any restrictions. There are many land lease communities that specialize or accept only a specific kind of home. The U.S. Department of Housing and Urban Development identifies a mobile home as a transportable home built before the establishment of codes on July 1, 1976. HUD classifies transported homes built after this date as manufactured homes due to the stricter manufacturing codes implemented by HUD.
The landlord generally prorates the total cost of the land and assesses your land lease fee based on the portion of the property you occupy. This assessment will determine the fees and portion of the total property tax you will pay. The landlord generally has broad discretion to set fees.
Terminating a Lease
The rules governing the termination of a land lease differ from the rules governing a regular residential lease. With a land lease, the property owner can terminate the tenancy even if the tenant owns the home attached to the land. State laws, however, generally require the landlord to give adequate notice to tenants before terminating a land lease. Depending on the conditions specified in the lease and state laws, a landlord may have to give up to a year's notice of lease termination.