LEASE LAND CAN ALSO BE AN OPTION…

The following information provides a general overview of what Indian lease land is and how it works. It is meant only to provide this overview, and does not apply to any specific lease or sub-lease. Any buyer or seller of property located on Indian lease land should carefully read that property’s lease and all supplements, attachments and addendums of said lease. 

Land is laid out by sections in a checkerboard fashion throughout  Palm Springs and also parts of Cathedral City and Rancho Mirage. Approximately every other section of this checkerboard is owned by the Agua Caliente Indians. Most of the residential properties are owned individually by tribal members, and all leases are administered  through the Bureau of Indian Affairs.

The lease fee paid covers long term use of the land. Although you do not own the land, the lease gives you legal right to the use of the land for the duration of the current lease. This is similar to the concept of condo ownership where technically you do not own the land it sits on, and you pay fees to the condo ownership association. Leases generally run from $2,000 to $4,000 per year and up depending on the property and the current lease with a maximum  lease period of 65 years. Renegotiations usually happen when they get down below 30 years and it is in the best interest of the land lease owners to not let them expire as they have no desire to own the improvements. If financing is required to purchase the property, keep in mind that all lenders will  look at  the duration of the lease and  there could be some financing restrictions such as for example a  requirement of a maximum of 90% loan to value ratio on the property

Possible benefits of lease land:

• Homes on Indian lease land appreciate close to or at the same rate as homes on fee simple property.
• Lease land generally sells for 10% to 20% less than a similar home built on fee simple land.
• Some of the most scenic and beautiful properties to be found in Palm Springs are located on Indian lease land

The Bureau of Indian Affairs-Palm Springs Agency serves as the federal agency having jurisdiction over the land on the Aqua Caliente Indian Reservation.The Aqua Caliente Indian Reservation encompasses approximately 28,000 acres of land in the western Coachella Valley, including portions of Palm Springs, Cathedral City, Rancho Mirage, and unincorporated areas of Riverside County.  There are more than 11,000 leases on land within the reservation boundaries. The leases generally fall into on of two categories:

Residential Leasing: 1. Master Lease 2. Residential Sublease

Commercial Leasing: 1. Master Lease 2. Commercial Sublease

Most of the leasing on the Aqua Caliente Indian Reservation falls into the category of residential leasing.  Residential master leases are typically negotiated by developers on large tracts of land.  After building single family residences or condominiums, developers then sublease the land the individual homeowners.  If you are an individual homeowner leasing land from a developer, you hold what iscommonly referred to as a Residential Sublease, whereas the developer who leased the land from the landowner holds the Master Lease.

What is the difference between “trust” land and “fee” land?

The term “trust” land refers to land held in trust by the United States for the beneficial use of anindividual Indian landowner or Tribe. In contrast, “fee” land is land not held in trust by the United States.  The U.S. Department of the Interior holds thousands of acres of land in “trust” on behalf of the Aqua Caliente Indian Tribe and the individual Indians of the Agua Caliente Band of Cahuilla Indians.  The U.S. Department of the Interior, through the Bureau of Indian Affairs, has been designated by federal law as the “Trustee” of Indian lands. As trustee, the Bureau of Indian Affairs has a fiduciary responsibility to ensure Indian landowners receive fair consideration for the use of their land.

I have a residential sublease. Does that mean the land is in “trust”?

Not necessarily. Residential leasing is not exclusive to Indian trust lands. In fact, developers in the Coachella Valley and elsewhere have purchased land in fee, developed the property, and then leased the property to homeowners.  When property is leased on fee land the Bureau of Indian Affairs does not have jurisdiction.

What is the role of the Bureau of Indian Affairs?

The Bureau of Indian Affairs-Palm Springs Agency provides technical assistance to Indian landowners on matter of real property management. The Bureau of Indian Affairs also holds approval authority for leasing of trust lands on the Aqua Caliente Indian Reservation.The Bureau of Indian Affairs does not represent developers, homeowners, or those who lease the land; however the Palm Springs Agency staff is available to answer questions regarding the leasing of federal trust lands on the Agua Caliente Indian Reservation.

Who do I contact if I want to extend my residential sublease?

Indian landowners, at their discretion, may enter into lease agreements or extend existing lease agreements. The Bureau of Indian Affairs does not compel landowners to enter into new leases or extend existing leases. If you want to extend your residential sublease you should first contact the lessor from whom you leased your land. If your lease directly from and Indian landowner you may submit your request for a lease extension to the landowner, their designated legal or financial representative, or through the Bureau of Indian Affairs-Palm Springs Agency.

What is TESA?

TESA is an acronym for Trust Enforcement Support Activities. TESA is contracted by the Agua Caliente Tribe to process documents associated with leasehold mortgages and the assignment of residential subleases. The Bureau of Indian Affairs maintains jurisdiction over the administrative functions TESA is contracted to perform.

Capitis Real Estate  is not responsible for any inaccuracies that might be contained in the following information, which is solely the opinion of Gregory Albert and Steve and based upon their experiences with leased land.