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Can the leasor take and operate my miniature golf course business?

Can the leasor take and operate my miniature golf course business?

Q: What kind of lease separates ownership of land and improvements?

A ground lease separates ownership of land and improvements, allowing the tenant to construct and own buildings on the leased land. The landowner retains ownership of the land, while the tenant has the right to develop it. The terms of such leases often detail what happens to the improvements at the end of the lease term.

Full question:

I leased a piece of vacant ground and upon it built a minature golf course. Now the leasor claims that at the end of the lease all improvements revert to leasor and leasor intends to take my business and run it as I have these past years. He claims the lease gives him this right under the clause. ' all alterations and improvements become the property of the leasor, except leasee's trade fixtures. It is my position that the property leasor can take but cannot use it to run the minature golf course business I built and ran without compensation to me as that is both a trade fixture and a intangable business asset or game of unique design. Does this lease clause give him the right to take and run the business I created?

Category: Landlord Tenant
Subcategory: Improvements and Fixtures
Date: 04/07/2025
State: California

Answer:

The landlord-tenant relationship is governed by the lease agreement, which outlines the rights of both parties. To understand your rights and the landlord's obligations, you should review the lease carefully, especially the definitions of alterations, improvements, and trade fixtures.

Generally, improvements that are permanently attached to the property become part of the real estate. However, trade fixtures—items unique to a business that can be removed without damaging the property—are an exception. As a tenant, you can typically remove trade fixtures before the lease ends, but you are responsible for any damage caused during removal.

In the U.S., a sale of land usually includes permanent fixtures unless specified otherwise. Trade fixtures are treated differently. Factors that help determine whether an item is a fixture include how permanently it is attached, its suitability for the property’s intended use, and the intent of the person who installed it.

In California, real property includes land and anything affixed to it (Cal. Civ. Code § 658). An item is considered affixed when it is attached in a way that cannot be easily removed without causing damage (Cal. Civ. Code § 660). Therefore, you should assess whether your miniature golf course elements qualify as trade fixtures or improvements.

Ultimately, if the lease states that all alterations and improvements revert to the landlord, you may need to argue that your business's unique elements are trade fixtures and cannot be used by the landlord without compensation.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What commercial investor usually values a property based on its ability to fulfill a specific business need?

A commercial real estate investor typically values a property based on its potential to generate income through its use for a specific business need. This includes assessing factors like location, market demand, and the property's ability to support the intended business operations. Investors often consider the property's cash flow, lease agreements, and the overall economic environment when determining its value.

What lease allows for separate ownership of the land and buildings?

A ground lease allows for separate ownership of the land and the buildings on it. In this arrangement, the landowner leases the land to a tenant, who can construct and own buildings or improvements on the property. At the end of the lease term, the landowner typically retains ownership of the land and any improvements made, unless otherwise specified in the lease.

Who owns improvements in a ground lease?

In a ground lease, the tenant usually owns the improvements made on the property during the lease term. However, the lease agreement often specifies that all improvements revert to the landowner at the end of the lease. It is essential to review the lease terms to understand the rights and obligations regarding ownership of improvements.

What happens to building at end of ground lease?

At the end of a ground lease, any buildings or improvements made by the tenant typically revert to the landowner unless the lease states otherwise. This means the landowner gains ownership of the structures without compensation to the tenant. Tenants should carefully review their lease agreements to understand the implications for their improvements.

What is a master ground lease?

A master ground lease is a long-term lease agreement where the landowner leases land to a tenant, who may then sublease the land to other tenants. This arrangement allows the tenant to develop the property while maintaining the landowner's rights. The master lease outlines the responsibilities and rights of both parties, including terms for improvements and reversion of property.