DEFINITION of 'Ground Rent Arrangement'
A situation in which someone owns a structure but not the land the structure is located on. Because she does not own the land, she has to pay rent on it. It is common for hotels and office buildings to be subject to ground rent arrangements; sometimes houses are, too. Ground rent arrangements are more common in some states than others.
BREAKING DOWN 'Ground Rent Arrangement'
For individuals, purchasing a home on leased land can be a more affordable option than purchasing both a home and the land it sits on. Also, the Internal Revenue Service allows ground rent payments to be deducted as mortgage interest under certain conditions. However, a ground rent arrangement can be a less stable form of home ownership because the homeowner has little control over what happens to the land.