Found a Home on Leased Land? What Maine and Florida Buyers Should Check Before Making an Offer

Before you offer on a home on leased land in Maine or Florida, check six things: the type of home, the time left on the lease, the ground rent and how it rises, whether the lease can be transferred and mortgaged, the foundation and title, and whether a lender has reviewed it. Here's how to check each one.

By Travis Penny, NMLS 1649161, mortgage broker with Vision Mortgage, LLC, NMLS 1286953, licensed in Maine and Florida.

Is it stick built, modular or manufactured?

Modular homes are built in a factory to state and local building codes, and lenders usually treat them like site built homes. Manufactured homes are built to the federal HUD code and follow separate rules. If it's manufactured, find out whether it's a single wide or multi section home, and whether it sits on a permanent foundation.

How much time is left on the lease?

This often makes or breaks the deal. For conventional loans, the lease generally has to run at least 5 years past the loan's maturity, unless the land will be deeded to the buyer sooner. Other programs have their own rules.

What's the ground rent, and how can it go up?

Get the current rent and the increase terms in writing. Fixed increases, increases tied to an index, and "whatever the owner decides" are very different risks.

Can the lease be transferred and mortgaged?

Look for language on selling, assigning or mortgaging the lease. If the landowner must approve every buyer, or the lease bans mortgages, that's a problem worth knowing before the offer.

Is the home real property with clean title?

Is the home legally part of the real estate, or titled like a vehicle? Is the lease recorded? A lender needs the home and the leasehold to be real property it can insure with title coverage.

Why get a property review before you assume financing?

"The last buyer got a loan" doesn't mean the next one will. Leases get amended and guidelines change. A quick review now beats a surprise three weeks into the contract.

Hypothetical example: two leased land listings

This is a made up comparison. It is not a real client, a past closing or an approved loan.

• House A: a stick built cape on a recorded 99 year ground lease with 80 years left, fixed rent increases, and language that lets the lease be sold and mortgaged. This one is worth a serious look for a leasehold mortgage. The lease, title, appraisal and borrower still have to check out.
• House B: a double wide in a park with a one year lot lease that renews annually. Under UWM's guidance, an individually leased park lot likely isn't eligible for a Fannie Mae loan. Under Freddie Mac, it would depend on the details: a multiwide home, a permanent foundation, title surrender, comparable sales and the community itself.

Two homes on leased land can land in very different places. That's why I look at the actual lease.

Leased land buyer FAQ

Can I get a mortgage without owning the land? Sometimes, yes. A leasehold mortgage covers the home and your rights under the land lease instead of the land itself. The lease has to meet the lender's rules on length, recording, transfer and lender protections, and the home and title still have to qualify. Send me the lease and I'll review it.

Can a double wide on rented land qualify? Some can. Under UWM's guidance, Freddie Mac loans allow multiwide homes on leased land with restrictions, like a permanent foundation and leasehold comparable sales. Fannie Mae loans don't allow individually leased park lots unless the home is in a PERS approved condo or PUD project. I review the details first.

Does paying lot rent make a property ineligible? No. Paying lot rent doesn't rule a home out by itself. The terms behind the rent are what matter: how long the lease runs, whether it's recorded, whether it can be sold and mortgaged, and how the rent can increase. Those details decide whether a leasehold mortgage is possible.

How long does the lease need to last? For conventional loans, the lease generally must run at least 5 years past the loan's maturity date, unless the land title will transfer to the borrower earlier. On a 30 year loan, that's about 35 years or more. Other loan programs set their own lease term rules, so check before you offer.

Do I have to buy the land at closing? Not if the leasehold qualifies. A lease that meets the program's rules can be financed without buying the land. Some leases include an option to buy the land later. If the owner will sell now, buying the land and home together can widen your options, and I can compare both.

What should my Realtor send the mortgage broker? Send the listing link, the full lease with all amendments, the current ground rent and increase terms, and any community or HOA documents. For a manufactured home, add the section count, year built and HUD label details. Use my secure upload link for documents instead of email.

Next step

Send me the listing and the lease, and I'll tell you plainly what I see. Start on my leased land home loans page, or see my Maine and Florida loan guides.

Mortgage broker, not a lender. Subject to credit, income, property, title, lease and program approval. Not all applicants or properties qualify. Travis Penny, NMLS 1649161 | Vision Mortgage, LLC, NMLS 1286953 | Equal Housing Opportunity.