What is Indian LeaseLand? An Overview:
The following information provides an 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. Lease payment amounts vary 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.
Some of the best neighborhoods in Palm Springs are on Indian land. Over 23,000 residential properties are located on Indian lease land, which give the home owner the right to the property for the duration of the lease
History of Indian Lease Land
In 1876, Pacific Railroad laid the tracks between Los Angeles and Yuma, Arizona. The U.S. government deeded the Agua Caliente 52,000 acres throughout the Coachella Valley (6,700 acres lay within the city of Palm Springs). The government gave the railroad a checkerboard of every square mile of land for 10 miles on either side of the railroad right-of-way. The Agua Caliente tribe got the non-Pacific Railroad owned squares. The city of Palm Springs is built on a “checkerboard” consisting of alternating Indian and non-Indian land.
Mortgages are available on lease land.
If financing is required to purchase the property, keep in mind that all lenders will look at the duration of the lease .Some leases do have minimal down payment requirements and other specific conditions. Interest rates tend to be the same for Lease and Fee Simple land. WE HIGHLY RECOMMEND WORKING WITH A LOCAL LENDER THAT IS FAMILIAR WITH LEASE LAND. Delays in closing are common when a buyer selects a lender, and/or escrow company,who is not familiar with local lease land.
<What is the Bureau of Indian Affairs?
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 one 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.
For more info on the BIA visit:
http://www.bia.gov/WhoWeAre/RegionalOffices/Pacific/WeAre/PalmSprings/index.htm
What is Fee Simple Land?
Fee simple is the most common type of land ownership, meaning that the owners have complete ownership of the land and the home, but are still subject to taxation and debt obligations on their mortgage. Fee simple is contrasted with lease ownership, meaning the owners have complete access to the land (you own the land).
Possible benefits of lease land:
- Homes on lease land tend to appreciate close to or at the same rate as homes on fee simple property.
- Lease land generally sells for 20% to 30% 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 price of the lease varies generally between $1400 and $6000 per year depending on the property, and subject to change. Some lease payments are paid annually; others are divided and paid monthly.
- Due to the price, the amount of the property taxes are less then fee land as you are typically only paying taxes based on the purchase price of the structure, not the land. This is not guaranteed, however. For more information, you can research the tax information with the Country of Riverside tax assessor.
- What about my children or heirs? Can I pass a leasehold estate on to them?Of course. You can give or sell your home on leased land just as easily as on fee land. However, if you are concerned about your heirs 65 years from now, there are four realistic questions you should ask yourself:
- What happens at the end of the lease? Since there is no legal restriction prohibiting the Lease Holder from selling their land, you or your heirs may have the option to purchase if you wish to do so. However, most probably, you would be offered a new lease based on conditions existing at that time; there would be no financial advantage to taking the land back.
*None of the above statements can be guaranteed. Before you get into a transaction on Indian lease land, you should read and review all contracts, leases and information about the specific lease as all leases are unique. We recommend you consult with your accountant, attorney and tax advisor prior to making any purchases on Lease OR Fee land.
