Ground Lease tenants face specific billing risks tied to how expenses are allocated and reconciled. The most common error appears in the section below. CAMAudit runs 14 forensic detection rules on your reconciliation statement to identify every recoverable dollar.
Arbitrary or methodologically flawed "fair market" ground rent resets at the 10-year or 25-year contractual reset date. Landlords commission appraisals that use inflated comparable transactions or inappropriate valuation methodologies (treating the improved land value rather than the unencumbered land value). Tenants can find their ground rent tripling based on a single landlord-commissioned appraisal.
A long-term lease (typically 25 to 99 years) covering only the land, not any structures on it. The tenant (lessee) constructs and owns all improvements on the land for the lease term. The landlord (lessor) receives ground rent. At lease expiration, the land and all improvements typically revert to the landlord. Ground leases are common for fast food pad sites, bank branches, and corporate build-to-suit facilities.
The tenant pays ground rent plus all expenses associated with owning and operating the improvements: property taxes on improvements, building insurance, construction financing, all maintenance and capital costs. The landlord's only income is the ground rent. Ground leases often function as absolute net leases with respect to the improvements.
No CAM, the tenant owns and manages all improvements directly. The only landlord-receivable is ground rent, which is typically set as a fixed amount with periodic escalation (CPI-tied, fixed percentage, or flat step-ups). Some ground leases include a "fair market" reset at 10- or 25-year intervals where the ground rent is reset to market rate via appraisal.
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Review ground rent escalation provisions carefully, CPI-linked escalations should use the specific CPI index defined in the lease. For fair market resets, require that the appraisal use unencumbered "as-if-vacant" land values and that the tenant has the right to commission a competing appraisal with a binding arbitration tie-breaker. Verify that the landlord has not included improvement value in the land appraisal.
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A CAM audit is only as accurate as your lease data. lextract.io extracts 126 structured fields from any commercial lease PDF: CAM definitions, pro-rata share, caps, base year, and audit rights. So you have the exact terms your landlord is supposed to follow.
Go to lextract.ioThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
