New-York tribune., 1921-11-27
Long Leases Help Build
Up Business Sections
Permit Concentration i'm Development Not Likely
Under Short Term Agreements; Lord Baltimore
Brought Lease Custom to America From England

be required Of the lessee, and the man
ner Of terminating the lease.
at seems superfiuous to caution real
ters about being sure of the description
Of the property, but it should be care
fully checked at the beginning of the ne
gotiations even if survey is necessary.
The price, of course, is purely matter
of negotiation. The usual security re-
eviyed of the lessee is that he shall erect
suitable improvements On the property.
The standard generally used for arriv-
ing at the value the required improve
ments shall have is half the value of the
land, the requirement oftener being less
than that amount and almost never
more. A safe guide for the realtor is to
SEQ that the lessor is guaranteed five
years rent and taxes, so that in case OF
forfeiture he may have that much time
In which to release the property favor
ably. In the event the lessee does not
wish to improve the property at once
ne furnishes bond that he will do 30
within certain specified time. This
bond may be in the form of cash or
securities, personal or surety company
bond, as agreed. If surety company
bond is used it should be provided that
as the building is being completed, the
money or securities deposited with the
surety company to secure the bond may
be taken down, to make the final pay
monts upon the building.
Termination of Lease
"The termination of the lease should
be carefully considered in the nege-
tiations and carefully worded in the
lease. When long term leases first
como into use in community not
enough attention>is paid to this phase
of the lease and leases just end, the
lessee walks out at the expiration and
all improvements pass to the lessor.
ain Cleveland, j. M. Henderson,
looking forward to the expiration Of
such long-term leases, foresaw that
this would be an inducement for the
the latter end of the term, and that
such neglect would tend to depreciats
not only the value Of the buildings,
but also the value of the land, and
even the value Of adjacent lands. By
way of. removing any such inducement
he devised what we refer to there as
the Henderson termination clause
This provides that at a specified time,
prior to the expiration of the lease,
the land and improvements shall be
valued separately; that the lessor shnll
have the first option to purchase the
improvements at their appraised value;
that the lessee shall have the second
option to purchase the land at its ap-
praised value and that if neither party
exercises his option, then the property
shall belong to them jointly, as their
respective interests appear. Any liens,
Of course, would hold only against tho
interest of the party by whom they
were incurred
Purchase option should always te
included in lease when agreed to by
the lessor. 1t adds value to the lease
hold and is fundamentally good judg-
ment, for. after all, the long term
lease is a means to an end, and is
mover as desirable as outright owncr-
ship. The purchase option is usually
at price slightly higher than that
arrived at.hy cspitalizing the ground
rent. The purchase option should be
I effective within certain time limits
enly, however, and should never be in
dot0YYn mate.