Legislative Relief for Ground Lease Cooperatives: The Next Phase of Rent Regulation
Cooperative corporations and their shareholders allege that they are subjected to unpredictable and frequently significant rent increases when ground rents reset.
May 06, 2024 at 10:00 AM
8 minute read
Perhaps the greatest uncertainty associated with ownership in a residential ground lease cooperative corporation is the question of ground rent escalations. Where the cooperative corporation leases the land on which a building has been constructed, in addition to traditional maintenance expenses for the operation of the building, shareholders are also responsible for their proportionate share of the ground rent due to the owner of the land. The method by which increases in ground rent are determined is a matter of contract, which varies by the terms of the individual ground lease. Because such increases are typically driven by market factors, rather than a fixed rent schedule, the increases are unpredictable.
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