What Is Fee Land In Palm Springs?

If you’re in the market for Palm Springs real estate, navigating the complexities of fee land can seem overwhelming.  To help you better understand this complex subject, we’ll be breaking it down with a simple explanation of fee land as it compares to lease land and what these two different ways of owning property in the Palm Springs area could mean for you. Palm Springs Fee Land History To really understand the nuances of why these two ways of owning land in Palm Springs exist, a quick look back at the history of the area will help. In the late 19th century, when the American government was dividing up the land, they created a checkerboard pattern of one square mile patches of land in which every other square was owned by the Agua Caliente band of Cahuilla Indians, and the rest was given to the Southern Pacific Railroad company.  A little less than a century later in 1959, the Agua Caliente band began leasing out their combined 52,000 acres of land at a preferred lease term of 65 years.  This land became what is known in Palm Springs as lease land, as opposed to the more familiar fee land, where homeowners become the owners of the land after purchasing it. Fee Land vs Lease Land So what are the pros and cons of the two types of land ownership?  While it may seem better to own your own property on fee land, this is actually not always the case.  Lease land has many benefits, including its considerable value over fee land.  This is because the value of homes and properties on lease land tend to cost less because residents pay lease payments rather than fee land, where you often end up paying more because you are paying for the land as well as the house.  In Palm Springs, the BIA (Bureau of Indian Affairs) deals with the leases, making sure that as you purchase your lease, it’s being taken care of.  Because of this system, uncertainty is always a factor in lease land, as there is a small chance that the family or families owning the land will decide not to renew the lease.  However, this is historically uncommon, as it's in the best interest of the BIA to keep these leases renewed as they profit from the system currently in place. Because of this, leases are usually renegotiated at a certain point long before this happens.  Mortgage Length on Lease Land Since lease land has a termination date, mortgages on the property must end five to six years before the lease on the land expires.  For example, a 30 year mortgage will only be available for a lease property when it has more than 35 years left on the lease.  As the lease length shortens, the BIA tends to work with homeowners to renew the lease, driving term lengths back up as well as potential buyers interested in the property. Which Type of Ownership is Preferred? Due to the complex and unique nature of both types of property, it’s really dependent on what you’re looking for. If you’d prefer the probability of paying less overall for your house with the small risk of having to move if the BIA doesn’t renew your lease, lease land is the way to go. If owning your own land is important to you despite the cost, fee land could be your best option. Are you interested in purchasing fee or lease land? Contact Geoffrey Moore today to discuss what options are best for you.