Ground Rent

Ground rent is the money paid for use of property that is part of a leasehold estate. In this type of arrangement, the ground is owned by one party, who can sell the right to build buildings and make improvements to the property to another party. In return for those rights, the other party pays ground rent to the property owner. In effect, the land belongs to one while the buildings belong to another. The owner of the land has the right to sell the land to another party, but that sale does not encompass the buildings on the property. While it was common in many states many decades ago, this arrangement is becoming less prevalent although in most jurisdictions it remains legal. When the building owners fail to pay the ground rent to the property owner, the property owner can go to court and get a lien against the buildings.