Indian Lease Land vs Fee Simple

What Is Indian Lease Land?

In 1876, Pacific Railroad laid the tracks between Los Angeles and Yuma, Arizona. The U.S. government deeded the Agua Caliente 52,000 acres throughout the Coachella Valley (6,700 acres lay within the city of Palm Springs). The government gave the railroad a checkerboard of every square mile of land for 10 miles on either side of the railroad right-of way. The Agua Caliente tribe got the non-Pacific Railroad owned squares. The city of Palm Springs is built on a “checkerboard” consisting of alternating Indian and non-Indian land. Some of the best neighborhoods in Palm Springs are on Indian land. Over 23000 residential properties are located on Indian lease land, which give the home owner the right to the property for the duration of the lease. Most Indian leases are administrated by the Bureau of Indian Affairs; a homeowner doesn’t deal with the Indian owners directly, but instead usually with the appointed property management company or Bureau of Indian Affairs office. Mortgages are available on lease land. Some leases do have minimal down payment requirements and other specific conditions, however, is possible to get a loan on lease land. Interests rates tend to be the same for Lease and Fee Simple land. However, WE RECOMMEND GOING WITH A LOCAL LENDER THAT IS FAMILIAR WITH LEASE LAND (Contact Paul Linger for more information on lenders that process lease loan applications.) The price of the lease varies generally between $1400 and $6000 per year depending on the property. Some lease payments are paid annually; others are divided and paid monthly. Lease land typically consists of long-term land leases that are commonly renewed well in advance of their expiration dates. However, each lease is unique and should be reviewed for the specific terms affecting a particular property. Typically, Indian Lease land properties have increased/decreased in value at the same rate as Fee Simple land (land that is not lease land).

Lease Land vs. Fee Simple

Are there financial benefits?

The primary difference between buying land and leasing it is obvious; lease land reduces the cost of a home by 15 to 20% on average. Once a structure is built the land beneath it can be of no other use to the homeowner. So, by owning on leased land, the homeowner gets the use of the land without the capital outlay – and can afford a far more luxurious home for less money. Furthermore, when financing a home, no one actually owns a home until the loan is paid off, most so-called “land owners” don’t really own their property for the duration of their mortgage.

Prices are traditionally 15% to 20% less for comparable properties on Fee Simple land. Due to this price difference, the amount of the property tax will be less as you are typically only paying taxes based on the purchase price of the structure, not the land. This is not guaranteed, however. For more information, you can research the tax information with the Country of Riverside tax assessor.

Won’t the value of my real estate climb faster if I own the land?

While many things determine resale values, all available figures indicated that resales of homes on leased land have climbed in the exact proportion as other homes in the same areas. The condition in which you keep your home has far more influence on its resale value than the fact it is or is not on lease land.

What about my children or heirs? Can I pass a leasehold estate on to them?

Yes. you can give or sell your home on leased land just as easily as on fee land.

What happens at the end of the lease?

Since there is no legal restriction prohibiting the Lease Holder from selling their land, you or your heirs may have the option to purchase if you wish to do so. however, most probably, you would be offered a new lease based on conditions existing at that time as there would be no financial advantage to Lessor taking the land back.

If you would like to learn more about the Indian lease land, please contact the Office of Trust Services at the Bureau of Indian Affairs Branch in Palm Springs at (760) 416-3289

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