Reset Clauses In Ground Leases

The purpose behind rent reset clauses is simple — to capture any change in the fair market value (and fair market rental value) of the leased property. However, the application of rent reset clauses in practice is anything but simple, and the consequences of such clauses can be significant.

12 minute read February 01, 2020 at 12:13 AM
By
Peter E. Fisch and Mitchell L. Berg
Reset Clauses In Ground Leases

Due to the long-term nature of ground leases, the rent that was initially negotiated between the parties may lag behind market ground rents after a period of time, even with fixed or consumer price index (CPI)-based increases.

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