# What is a 99 year lease? - Posted by Joe

Posted by Hank FL on October 27, 2003 at 23:49:31:

Just plug in the “rule against perpetuities” into google and then have some fun.

Hey, look what I found:

http://law.papr.org/arch/000120.php

A highlight:

>>Just remember, to figure out a Rule Against Perpetuities question, kill everybody.

It’s very satisfying to knock off that old hag of a grandmother who owns Blackacre just because she’s theoretically capable of squeezing out a baby at 99 years old.

Posted by: Crawford at May 31, 2003 06:49 PM<<

I hoped that helped, or rather, didn’t harm too much.

What is a 99 year lease? - Posted by Joe

Posted by Joe on October 27, 2003 at 21:57:28:

So for example if you buy a property with a 99 year lease for \$300,000, would that 300,000 divided by 99 equals \$3030 and \$252 per month. Is that correct?

Re: What is a 99 year lease? - Posted by Tom-FL

Posted by Tom-FL on October 28, 2003 at 20:38:04:

>> So for example if you buy a property with a 99 year lease for \$300,000, would that 300,000 divided by 99 equals \$3030 and \$252 per month. Is that correct?<<

I don’t see a connection at all. Using that logic, your \$300,000 property on a one year lease would come to \$300,000 per year and \$25,000 per month. Too rich for me.

Re: What is a 99 year lease? - Posted by Brent_IL

Posted by Brent_IL on October 28, 2003 at 13:52:23:

99-year leases are used frequently with commercial properties. It gives the lessee time to spread out the cost of improvements while allowing the lessor to retain ownership. This is coming from the recesses of my memory, but I think that a lease for 100 years, or more, is considered a sale by the IRS. Don’t take my word for it.

As Hank said, the rule against perpetuities is a trip. The common law idea was that fee ownership consisted of a bundle of rights, and that the bundle should not be separated indefinitely. Condominium ownership spurred many states to modify their Rule against Perpetuities statutes, Illinois and Florida among them. The rule against perpetuities plays an important part in estate planning.

I once tried doing a SFH deal utilizing a 99-year lease. It wasn?t one of my better ideas. No one wanted to buy any kind of an interest in a residential lease. I guess people like the concept of passing on their property to their descendents. At the time, I didn?t have the resources to hold, so I sold the guy his lease back. Another expensive seminar.

Not quite - Posted by DaveD (WI)

Posted by DaveD (WI) on October 28, 2003 at 08:28:33:

What you outlined is a 99 year zero percent straight amortized loan. Not bad if you can get it.

A very long lease is used when it is impractical to purchase the parcel. Title remains with the owner, of course. You have control of the land and the improvements. Payments on the leasehold, as well as any amount going towards a purchase price are whatever you negotiate.