Land Lease Condos in Miami: Underwriting the Leasehold Discount

Last updated: August 2026

A land lease condo in Miami is a unit where you own the improvement and someone else owns the ground. The parcel under the building, or the recreational parcel beside it, sits under a long-term lease held by an entity that is not the association, and every owner pays for that lease for as long as it runs. Two versions show up across Miami-Dade: a ground lease covering the land the building occupies, and a recreation lease covering a pool deck, clubhouse, marina, or parking area. Either one creates a payment obligation that travels with the unit.

You confirm it in three documents. Schedule B-II of the title commitment lists the recorded lease as an exception. The declaration of condominium describes the leased property and the owners' obligation. The association budget shows the cost, because Florida law requires the estimated operating budget to break out "Rent for recreational and other commonly used facilities" as an association expense and, separately, "Rent payable by the unit owner directly to the lessor or agent under any recreational lease" [1].

Then price it. Leasehold units trade below fee-simple comps, and that gap is compensation for a wasting asset, not a discount you keep. Fannie Mae requires the unexpired lease term to exceed the loan maturity date by five years or more [2], and Freddie Mac applies the same five-year tail [3]. FHA insurance requires a lease of not less than 99 years which is renewable, or one with not less than 10 years to run beyond the mortgage maturity date [4].

How to spot a land lease condo before you write an offer

Start with Schedule B-II

The title commitment is the first place to look. A recorded ground lease, memorandum of lease, recreation lease, or assignment of lessor's interest appears as a Schedule B-II exception. Order the underlying instruments, not just the schedule: the exception line gives you a book and page, while the lease gives you the rent, the term, and the reset mechanics.

Pull the recorded documents yourself

The Miami-Dade Clerk's online official records index covers most recorded documents from 1974 forward, with earlier records still being added to the web system [5]. Many South Florida recreation leases were recorded during the condominium build-out of the late 1960s and early 1970s, so an original lease may sit outside the online index. Absence of a web hit is not evidence of absence of a lease.

Do not expect the assessment roll to flag it

Miami-Dade condominiums are assessed on a total value basis, so the property record shows no separate land, building, or extra-feature breakout [6]. There is no land line for you to notice is missing, and the public assessment data will not distinguish a leasehold unit from a fee-simple one.

The statutory floor, and why older buildings deserve more scrutiny

Florida permits a condominium on leased land only if, on the date the developer conveys the first unit to a bona fide purchaser, the lease has an unexpired term of at least 50 years for a residential condominium, or at least 30 years for a nonresidential, commercial, or timeshare condominium [7]. Cooperatives under chapter 719 carry the same 50-year test [8].

Read that as a clock rather than a safeguard. A residential condominium created in the mid-1970s on exactly the statutory minimum has already run through its original term. The statute governs the moment of creation, not the moment you buy, and it says nothing about what the remaining term is worth.

Why the discount is not a bargain by default

Two separate effects drive leasehold pricing, and listing-level analysis usually collapses them into one number.

The first is capitalized rent. Ground rent is an operating expense that produces no equity. Purely as illustrative arithmetic, ground rent of $14,000 a year capitalized at a required return of 7 percent represents roughly $200,000 of value sitting with the landowner rather than the unit. That portion of the discount is static, and it is arguably fair value.

The second is term decay, and this is where investors get hurt. A leasehold is a wasting asset, so the correct discount to fee simple should widen as the remaining term shortens. If a building's leasehold units traded at 20 percent under fee-simple comps a decade ago and still trade at 20 percent today, either the market is mispricing the term or an extension is in progress. Find out which before you underwrite the spread as opportunity.

Escalation clauses: what Florida voids and what it does not

Fla. Stat. 718.4015 declares escalation clauses in land leases and other leases for recreational facilities serving residential condominiums void as against public policy, and defines an escalation clause as one providing that rent increases at the same percentage rate as a nationally recognized and conveniently available commodity or consumer price index. The prohibition applies where the declaration was recorded on or after June 4, 1975, with separate timing rules for earlier condominiums and an exception where the lessor is a government body [9].

That is narrower than it first reads. Fixed dollar step-ups, stated percentage increases not tied to an index, and periodic fair market value resets are structurally different from index-linked escalation, and a reset to market can move rent further than any index clause would have. Have Florida counsel read the clause against the statute. The description above is not legal advice.

The financing constraint sets your exit price

Underwrite backwards from the buyer you will need, not the buyer you are.

For a 30-year conforming loan, the agency five-year tail means roughly 35 years of unexpired term at origination [2][3]. For a 30-year FHA loan, the statutory test means roughly 40 years, unless the lease is 99 years and renewable [4]. HUD also requires the appraiser to analyze and report the ground lease terms, including rent, term, renewability, and whether rent can change [10].

The failure is gradual rather than binary. A unit with 33 years of term left does not become unfinanceable overnight. It first compresses the maximum loan term to about 28 years, which raises the payment and narrows the buyer pool. Rates change constantly, so check the current weekly average at Freddie Mac's Primary Mortgage Market Survey [11] rather than any figure in an article. As labeled hypothetical arithmetic only: a $400,000 loan at a hypothetical 6.5 percent costs roughly $2,530 a month over 30 years and roughly $2,700 a month over 25 years, about 7 percent more for the same balance. Below a five-year tail, agency financing is unavailable and the unit is portfolio-lender or cash territory.

Your exit date is what governs. If you hold seven years, your buyer faces the same test with seven fewer years of term.

What happens at expiration or renegotiation

Chapter 718 sets minimum terms at creation and limits certain lessor remedies, but it does not dictate the outcome at the end of the term [7]. The lease and the declaration control. The realistic paths are renewal at a negotiated rent, an extension or fee purchase funded by special assessment, or reversion of the improvements to the landowner. Underwrite all three, and price the special assessment as a cash call rather than a footnote.

What to demand in due diligence

Ask for the complete lease with every amendment and assignment; the current rent schedule and the next three scheduled adjustments; the reset or escalation mechanics in the operative language; the remaining term, every renewal option, and who holds each option; the identity of the current lessor; the default and cure provisions, including whether the lessor can lien individual units; the current budget showing both statutory rent lines [1]; board minutes covering any renegotiation or buyout discussion; and a written read from your lender on the maximum loan term the remaining lease supports.

When the yield genuinely compensates

A leasehold unit clears underwriting when four conditions hold at once. The discount to fee simple exceeds capitalized rent plus a term haircut plus a liquidity haircut. Your hold period ends well before the financing cliff. Future rent is knowable from the document rather than subject to an open-ended reset inside your hold. And your exit buyer is financeable on the term remaining at your exit date.

The analysis is the same in every submarket. Whether the building sits in Brickell or Miami Beach, the leasehold question is answered in Schedule B-II and the declaration, not in the listing remarks. To have the documents read against the numbers before you commit, start with a buyer consultation.

Frequently asked questions

How do I know if a Miami condo is on a land lease?

Check Schedule B-II of the title commitment for a recorded ground lease, memorandum of lease, or recreation lease, then read the declaration and the current budget. Florida requires the operating budget to show rent for recreational and commonly used facilities as its own expense classification, and to show separately any rent a unit owner pays directly to a lessor [1]. Recorded instruments are searchable through the Miami-Dade Clerk's official records system, which covers most documents from 1974 forward [5].

Can I get a conventional mortgage on a land lease condo?

Only if the term supports it. Fannie Mae requires the unexpired lease term to exceed the loan maturity date by five years or more [2], and Freddie Mac requires the leasehold estate to run at least five years beyond the mortgage maturity date [3]. A 30-year loan therefore needs roughly 35 years of remaining term. Shorter remaining terms can still work on shorter loan terms, at a higher payment, until the tail runs out.

What are the FHA rules for leasehold condos?

Federal law defines an insurable mortgage to include a first mortgage on a leasehold under a lease of not less than 99 years which is renewable, or under a lease having not less than 10 years to run beyond the mortgage maturity date [4]. HUD separately requires the appraiser to analyze and report the ground lease terms [10].

Are rent escalation clauses in Florida condo recreation leases enforceable?

Fla. Stat. 718.4015 voids index-linked escalation clauses in leases for recreational facilities serving residential condominiums, subject to timing rules keyed to when the declaration was recorded and an exception where the lessor is a government body [9]. Clauses that raise rent by a fixed amount, by a stated percentage, or through a fair market value reset are structured differently and should be reviewed by Florida counsel.

Gabriel

Sources

Gabriel A. Moyers, PA. eXp Realty. Florida License #3407280. Equal Housing Opportunity. This article is general information as of August 2026 and is not legal, tax, or financial advice. Verify current figures against authoritative sources before acting.