Yes, you can rent land in the United States. Renting land is done through a written agreement called a ground lease or land lease: the owner keeps title, and you get the right to use the property for a set period that can run from a single growing season to 99 years. The type of lease, the terms inside it, and the checks you run before signing decide whether the deal protects you or sets you up for an expensive problem.
Which Kind of Land Lease Fits Your Plan
Land leases sort by what the tenant intends to do with the ground. The three common categories carry different norms, different risks, and different legal expectations.
Agricultural Leases
An agricultural lease covers crop production, livestock grazing, or both. Payment is usually structured one of two ways. A cash-rent lease sets a fixed dollar amount per acre, and the tenant keeps all the profit and absorbs all the risk from what the land produces. A crop-share lease splits the harvest between landowner and tenant at an agreed ratio, which ties the owner’s income to the yield. Agricultural leases often need to address hunting access, timber rights, or conservation restrictions as well, so both parties should spell out which uses beyond the primary farming operation are allowed.
Residential Pad Leases
A residential pad lease lets you place a manufactured or mobile home on a rented lot, usually inside a larger community. You own the home; you don’t own the ground under it. These leases typically run month-to-month or year-to-year and require the tenant to maintain the lot, carry liability insurance, and follow community rules on landscaping, pets, and structural changes.
Commercial Ground Leases
Commercial ground leases are the longest and most complex. A developer or business tenant leases raw land and builds on it, from a single restaurant to a multi-story office. Terms commonly run 25 to 99 years because the tenant needs enough time to recover construction costs and earn a return. The length and the dollars involved make these the most heavily negotiated of the three types.
Terms That Have to Be in the Lease
A land lease is only as strong as the details inside it. Vague or missing terms are where most landlord-tenant fights start, and sorting the language out after a dispute always costs more than getting it right at the beginning.
Legal Description and Permitted Use
The lease needs a precise legal description of the property, not just a street address. Legal descriptions use methods like metes and bounds or lot and block numbers to fix the exact boundaries, and you can pull the current version from the most recent deed or your county assessor’s office. The lease also has to say what you can do on the site, and that use must line up with local zoning. Operating outside zoning can bring fines, forced closure, or termination of the lease.
Term, Rent, and Rent Escalation
State the exact start and end dates, the starting rent, and how rent changes over time. Escalation clauses commonly tie increases to the Consumer Price Index or set a fixed percentage bump at regular intervals. Long-term commercial leases often include periodic fair-market-value resets as well, where the rent adjusts to current land values every ten or fifteen years.
Who Pays What
Many land leases are structured as triple-net, meaning the tenant pays property taxes, insurance, and maintenance on top of base rent. That arrangement is standard for commercial ground leases and shifts almost all operating costs onto the tenant. Whatever the structure, the lease has to say clearly who pays which bill. Ambiguity about property taxes or insurance obligations is a predictable source of litigation.
Improvements and What Happens at the End
If you plan to build on leased land, the lease has to address who owns the improvements during the term and what happens to them when the lease ends. In most commercial ground leases, the improvements revert to the landowner at the end of the term. In others, the tenant has to remove what they built and restore the site. This one clause can represent millions of dollars, and negotiating it after the building goes up gives the landowner all the leverage.
Security Deposits and Late Fees
Security deposit amounts and late-fee provisions vary by lease type and bargaining power. Late fees for commercial land leases commonly run 5% to 10% of the overdue payment. Both numbers should be stated clearly. Vague penalty language invites disputes and may not hold up in court.
Insurance
Landowners almost always require the tenant to carry insurance, with the type and amount depending on the use of the property. Commercial ground leases typically require general liability coverage of at least $1 million per occurrence and $2 million in aggregate, often with an umbrella policy on top. The tenant also usually has to carry property insurance covering the full replacement cost of any improvements, plus loss-of-income coverage. Agricultural and residential pad leases need less coverage, but the landowner should still be named as an additional insured so they receive notice if the policy lapses and can file a claim if the tenant’s activities damage the property.
Due Diligence Before You Sign
Signing a land lease without checking the property first is one of the more expensive mistakes in real estate. Three areas matter most.
Zoning Verification
Confirm that local zoning allows the use you have in mind before you sign anything. A verbal assurance from the landowner is not enough. Most local planning departments will issue a formal zoning verification letter for a fee, confirming the current classification, any overlay districts, and whether your use is permitted by right or needs a special exception.
Environmental Site Assessment
A Phase I Environmental Site Assessment reviews the property’s history to flag potential contamination from past uses like gas stations, dry cleaners, or industrial operations. This matters because federal law under CERCLA can hold current owners and operators of contaminated property liable for cleanup, and courts have treated tenants as “operators” in some cases.1Office of the Law Revision Counsel. 42 U.S. Code 9607 – Liability Completing a Phase I that meets the All Appropriate Inquiries standard is a prerequisite for claiming the innocent landowner defense if contamination is later discovered.2eCFR. 40 CFR Part 312 – Innocent Landowners, Standards for Conducting All Appropriate Inquiries Skip it and you absorb the environmental risk with no legal shield.
Boundary Survey
A professional boundary survey confirms that the land you think you’re leasing matches the legal description in the lease. Surveys also surface encroachments, easements, and access issues that may not show up in a title search. National averages run roughly $1,200 to $5,500, with costs climbing for larger or more complex parcels. On a long-term commercial lease where you plan to build, the survey is cheap next to the problems it prevents.
Get the Lease in Writing, Then Record It
Every state has some version of the Statute of Frauds, and it applies to land leases. The general rule is that any lease lasting more than one year must be in writing and signed by the parties to be enforceable. A handful of states set the threshold at three years, but relying on an oral agreement for any significant land lease is reckless no matter what the local rule says. If a dispute reaches court, an unwritten lease is almost impossible to enforce, and the terms you thought you agreed to become a swearing contest.
The written agreement doesn’t have to be a 50-page document for simpler leases. At minimum, it has to identify the parties, describe the land, state the term, set the rent, and be signed. Commercial ground leases usually need far more detail covering financing rights, improvement ownership, insurance, default remedies, and more.
Once the lease is signed and notarized, record it with the county recorder or register of deeds. Most parties record a memorandum of lease rather than the full agreement. The memorandum identifies the property, names the parties, states the term, and notes any key rights like purchase options, while leaving financial details out of the public record.
Recording creates what lawyers call constructive notice, which means the legal system treats everyone as aware the lease exists whether they actually read the filing or not. If the landowner sells, the new owner takes the property subject to your lease. If a creditor tries to foreclose on the landowner’s interest, your recorded lease survives. Without recording, a later buyer or lender who checks title and sees no lease could argue they had no knowledge of your rights. Filing fees typically run a few tens of dollars.
Building and Financing on Leased Land
Getting a mortgage or construction loan on leased land is harder than financing property you own outright. Lenders face the risk that the lease could terminate and wipe out their collateral, so they impose conditions both the tenant and the landowner need to understand.
Most lenders require that the remaining lease term extend at least 20 years past the loan’s maturity date. Lenders also typically require that the lease allow assignment without the landowner’s consent in a foreclosure, and that the landowner cannot amend or cancel the lease without the lender’s written approval.
The biggest financing question is whether the lease is subordinated or unsubordinated. In a subordinated ground lease, the landowner agrees to let the tenant use the property as collateral for a construction or mortgage loan. If the tenant defaults, the lender can foreclose on the land itself. Owners accept that risk because they can usually charge higher rent in return, and lenders are far more willing to finance the project because the land backs the loan.
In an unsubordinated ground lease, the landowner keeps priority over any lender. If the tenant defaults, the lender can go after the tenant’s business assets and the improvements, but it cannot seize the underlying land. The owner is protected and the tenant has a harder time finding financing. Many lenders won’t touch a leasehold loan without subordination, and the ones that will often demand higher interest or shorter terms.
This is where most commercial ground lease negotiations get tense. Owners want to keep the land safe from a tenant’s creditors; tenants want the financing leverage subordination gives them. In practice, parties often negotiate partial subordination or build in lender notice and cure rights that give the lender time to fix a default before the owner can terminate the lease. Government-backed programs like FHA loans have their own requirements for leasehold properties, including minimum remaining lease terms, and not every lender does leasehold lending at all.
When Something Goes Wrong
The sections of a land lease that matter most are the ones you hope never to use.
Cure Periods
A well-drafted lease gives the party in default written notice and a window to fix the problem before the other side can terminate. A cure period might be 14 days for a missed rent payment or 30 to 90 days for other breaches like letting insurance lapse or violating the permitted-use clause. Without a cure period, a single late payment could in theory end a 50-year commercial lease, a result no court likes to enforce and no sensible party should want.
Early Termination
If a tenant walks away early and the lease doesn’t explicitly allow it, the tenant can be liable for the remaining rent. The landowner has a legal duty to mitigate damages by trying to re-lease the property, but the tenant is on the hook for any shortfall. If the landowner terminates early without justification, the tenant can sue for financial losses, including investments in improvements and, for agricultural tenants, the value of unharvested crops. At minimum, an agricultural tenant who loses a lease early is usually entitled to harvest any standing crops.
Dispute Resolution
Many land leases require mediation or arbitration before either party can file a lawsuit. Arbitration is generally faster and cheaper than litigation but limits your right to appeal. Some states restrict arbitration in disputes involving title to or possession of real property, so enforceability varies. Whichever route you prefer, the dispute resolution process should be clearly spelled out in the lease.
How the Lease Ends
How a lease ends matters almost as much as how it begins, especially when the tenant has invested in improvements.
Automatic Renewal and Extension Options
An evergreen clause automatically renews the lease at the end of its term unless one party gives written notice, often 90 days before the renewal date. Convenient, and dangerous if you aren’t tracking the deadline. A tenant who misses the opt-out window can be locked into another multi-year term, and an owner who wants the property back can lose it for another cycle. Any extension or renewal clause should state the notice period, the length of each renewal term, and whether the rent resets.
Right of First Refusal
A right of first refusal gives the tenant the first opportunity to buy the property if the owner decides to sell. The owner has to notify the tenant before accepting any outside offer, and the tenant gets a set window to match the terms or decline. If the tenant passes or doesn’t respond in time, the owner is free to sell to someone else. For a tenant who has invested in a location, this clause is meaningful protection against losing the site to a third party.
Improvement Reversion
In most commercial ground leases, any buildings the tenant constructs become the owner’s property when the lease ends. Some leases instead require the tenant to demolish improvements and restore the site, which can cost as much as the original construction. Either way, negotiate this at the start. A tenant who spends $2 million building a retail space only to hand it over at the end of a 30-year lease has effectively made a gift, and the economics of the deal need to reflect that transfer from day one.
Tax Reporting for Each Side
Both sides of a land lease have tax consequences, and getting the reporting wrong can draw IRS penalties.
If you lease out land for non-farm purposes, you report the rental income on Schedule E of your federal return. The IRS instructions for Schedule E direct landlords to enter code “5” for land rental on line 1b.3Internal Revenue Service. 2025 Instructions for Schedule E (Form 1040) You can deduct ordinary expenses like insurance, legal fees, property taxes, and maintenance. You cannot depreciate the land itself, because the IRS treats land as a non-wasting asset that doesn’t wear out or become obsolete.4Internal Revenue Service. Publication 527 (2025), Residential Rental Property
Farm landlords who receive crop-share or livestock-share payments and don’t materially participate in managing the farm use Form 4835 instead of Schedule E, and income reported on Form 4835 is not subject to self-employment tax.5Internal Revenue Service. About Form 4835, Farm Rental Income and Expenses If you do materially participate, the income goes on Schedule F and is subject to self-employment tax, a difference that catches some landowners off guard.
Tenants who use leased land for business can generally deduct lease payments as a business expense. If you build improvements on leased land, you depreciate them over their useful life or the remaining lease term, whichever is shorter. The specifics depend on the type of improvement and the lease terms, so a tax professional earns their fee here.