Thinking of buying in a building with a land lease?

If you are thinking of buying in a building where they lease the land below the condo, only do so if there are sufficient time left on the land lease, meaning 30 years or more and you understand fully the risks.

In general, the land price can skyrocket at the end of the land lease in the case where the owner is a private individual or company so have an attorney very knowledgeable in these matters advise you. Also, have a buyer broker who knows what questions to ask to save you unnecessary attorney expense. How much does the land lease go up annually and for how long are those rates locked in?

In Battery Park City, the owner of the land leases of all the buildings is the Battery Park City Authority, a non profit set up to create and preserve the neighborhood of Battery Park so there is not an interest to raise the rents beyond the realm of reason. Having said that, you and your broker, plus later attorney should exercise caution and make sure that you are getting exceptional value for your purchase.

For example, as a result of paying rent on the land, your monthly charges might be higher than a typical Manhattan apartment.  If you are going to be paying a higher than normal monthly charge then the apartment should be less expensive than something similar where the monthly charges would be on par with Manhattan averages. Also, you might not see the typical appreciation that you would see on other Manhattan apartments.

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