Land Lease Option

AAA

DEFINITION of 'Land Lease Option'

An option within a lease contract that grants the lessee the right to extend the period of the lease beyond the original length of time. Usually, the lessee is required to pay a premium for the option, such as a small amount of money in each year of the original lease.

INVESTOPEDIA EXPLAINS 'Land Lease Option'

Like all options contracts, the land lease option allows its holder to act on favorable future market conditions. The lessee may want an option for many reasons. If the future market value of the land is uncertain, an option will allow the lessee to extend a relatively cheap lease in a rising price environment. For corporations, lease options allow them to reevaluate operations based on leased land in the future, before locking themselves into very long-term contracts.

RELATED TERMS
  1. Recapture Clause

    A provision usually found in percentage leases, especially in ...
  2. Land Flip

    A fraudulent practice in the real estate business of selling ...
  3. Land Trust

    A legal agreement where a trustee is appointed to maintain ownership ...
  4. Embedded Option

    A provision in a security that is an inseparable part of the ...
  5. Lease

    A legal document outlining the terms under which one party agrees ...
  6. Lessee

    The person who rents land or property from a lessor. The lessee ...
Related Articles
  1. Should You Buy Property On Leased Land? ...
    Retirement

    Should You Buy Property On Leased Land? ...

  2. Tips For The Prospective Landlord
    Home & Auto

    Tips For The Prospective Landlord

  3. New Wheels: Lease Or Buy?
    Home & Auto

    New Wheels: Lease Or Buy?

  4. Simple Ways To Invest In Real Estate
    Home & Auto

    Simple Ways To Invest In Real Estate

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center