Florida Broker Practice Exam

In what scenario would a ground lease be typical?

1. Residential leases for single-family homes

2. Commercial leases where the tenant builds on leased land

3. Short-term rental agreements

4. Leases that include personal property

The correct answer is: Commercial leases where the tenant builds on leased land

A ground lease is characterized by a long-term rental agreement in which a tenant is allowed to develop property on land that they do not own. This arrangement is commonly used in commercial leasing scenarios where the tenant wants to build a structure—such as a retail space, office building, or industrial facility—on the leased land. Ground leases typically span many years, often 50 years or more, which allows the tenant to recoup their investment in the construction of a building. Since the tenant holds rights to develop the property, the ground lease arrangement creates an incentive for them to create a long-lasting investment. This type of lease is less common in residential contexts, as single-family homes usually involve traditional lease agreements that don’t permit significant alterations or construction by the tenant. Short-term rental agreements, often seen in vacation rentals or temporary housing, do not align with the long-term nature of a ground lease. Likewise, leases that include personal property typically refer to agreements for equipment or personal items, rather than land development. Thus, when looking for a typical scenario for a ground lease, the option involving commercial leases, where a tenant builds on leased land, fits perfectly.