A 99-year lease is simply a long-term lease, and the way it
works depends on the terms of the particular lease. Lease terms vary depending
on whether a lease is residential or commercial. Even so, almost all leases
include terms addressing the length of the tenancy; the amount of rent and deposits
the tenant must pay; whether the tenant may sublet or assign the property; and
landlord access to the property. Commercial leases tend to grant more of the
rights and responsibilities of ownership (even in relatively short-term leases
of five or ten years), and they usually include detailed terms about legal rights
and making improvements to the property.
For a lease term, there is nothing special about 99 years, rather the term of
years is intended to convey the idea that the lease runs for the life of the tenant
as most individuals don't live longer than 99 years. Other common terms
of duration for long-term leases are 50 years, 80 years and 175 years.
Why would someone want to enter into such a long-term lease?
A person enters into a long-term lease to acquire the security of property ownership,
which is theoretically indefinite, without actually having to purchase the property.
There can be many reasons to lease rather purchase real property, but the most
common reason to avoid an outright sale is because it is forbidden. For example,
some countries only permit citizens to own land, so non-citizens who wish to
reside in those countries typically enter into long-term leases. Also, long-term
leases have the benefit of locking in a particular (hopefully low) lease payment,
whereas a mortgage payment or a short-term lease will fluctuate with interest
rates and the real estate market. Long-term leases are sometimes used to make
gifts of real property or as tax and estate-planning devices.
Though the 99-year lease term may be derived from the individual lifespan,
this type of lease is not restricted to use by individuals. Indeed, such long-term
leases are usually used in the commercial context, for businesses, rather than
in the individual, residential context. Private companies often enter into long-term
leases for use of federal land. For example, most ports are run by private companies,
but the ports themselves are government property. In order to house the employees
and business infrastructure, a company might lease a building on the port for
a term of 99 years. As well, restaurants, bars and other location-sensitive
businesses may enter into a long-term lease because the success of the business
depends on staying in that particular location.
Answer Submitted on Thu, Sep 28 2006
Rate this Answer: