Indian Lease Land

Extract of an article published in the Desert Sun on April 3, 2011 , article written by Mike Perrault :

“Keller Williams Realty agent Claudine Messika said she did her due diligence, compared the options and chose to purchase her own home on lease land.

“Indian lease land gave me the opportunity to own and live in a beautiful home that I could not afford on fee land,” she said.

Messika provided an example illustrating how a buyer might fare purchasing a home on lease land. The buyer who pays $500,000 on purchased land would have $6,250 in annual property taxes.

That same buyer might pay $400,000 on lease land, $5,000 for annual property taxes and $4,500 a year for the annual lease, bringing annual costs to $9,500.

Although it cost $3,250 a year more on lease land, Messika said a buyer would need about 30 years of lease land payments to reach the original price of the same property on purchased land.”

I am the owner of a property on Indian lease land. As a realtor I did my due diligence and compared all my options. Indian lease land gave me the opportunity to own and live in a beautiful home that I could not afford on fee land.

The maximum lease period is 65 years and leases are renewed or extended when they reach down between 25 and 35 years. The properties on Indian lease land may be inherited and passed on as any other property in the US.

Fee land ownership is the traditional type of ownership where you own the land and in Palm Springs when you buy a property always make sure to ask the question if the property is on FEE LAND or LEASE LAND.

 

Is Palm Springs on Indian Land?

Yes and No.
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.

This arrangement is extremely unique. Most Native American reservations across the United States were located outside of areas that became city limits. The city of Palm Springs is built on a “checkerboard” consisting of alternating Indian and non-Indian land. It may sound a little unsettling from a real estate perspective, but these are long term land leases that are commonly renewed well in advance of their expiration dates (it would be a public relations nightmare if they were not). Judging by the skyrocketing Palm Springs real estate prices, this unique situation has done nothing to slow the appreciation of property values.

Best,
David J Castello
PalmSprings.com History Editor

Indian Land is laid out by sections like a checkerboard with some residential and some commercial. Over 23000 residential properties are located on Indian lease land. The lease gives you legal right to use the land for the duration of the lease. All leases are administrated by the Bureau of Indian Affairs- you never have to deal with the Indian owners directly – and the fees paid cover long term use of the land.

What would make properties on Indian land lease more attractive?

  • Prices are traditionally 15% to 20% less for comparable properties on fee land.
  • Due to the price the amount of the property taxes are also reduced

The price of the lease varies generally between $2500 and $ 4500 per year.

 

Lease land Fee land
 Home price  $ 400,000  $ 500,000
 Annual property taxes at  1,25%  $    5,000  $    6,250
 Annual lease amount  $    4,500  $    0
 Total annual expense  $    9,500  $    6,250

 

Based on the chart above as an example, the difference in cost for lease land compared to fee land is: $3,250 yearly. Yes it does cost you $3,250 a year but the initial difference in the price for the property was $100,000. You would need 30 years of land lease payment to reach the original price of the same property on fee land.

So if you find a property on lease land that you do like, consider and apply a similar calculation before you make a decision one way or another.

If you would like to learn more about the Indian lease land, please contact the bureau of Indian Affairs, in Palm Springs at (760) 416 3289

 

Disclaimer

This information is only an overview. Your calculations may differ. Keller Williams Realty and this realtor are not responsible for any errors or omissions. Before you get into a transaction on Indian lease land, you should read and review all contracts, leases and information about the specific lease.