The ReatrtuBhte Boa'lcol edif ornin

12e Tlt.eRedlta Blrrc Boolr of Calilontia

Long Term l-eases

B.t/ Jor'rN GRossE,Pasadena

HistorA ol ],t)nr! Tb e Leq.\euhL Cdlifornia;-tulrantag.

to tlLe Olutel ol lee Ailr.Lntage to Lessee ld,eal FomL for
Fc. O)r)tct-Pt fit'nblcI .1:.st,t? t fo) Lerset.

HEN I lirst cane to Calilornia,in 1902,the 1:1wot this strte

limitcd leasirg to a telm ol twenty years. BeiDg familiar
1r.ith lhe advartages of loDg tern leascs,I took steps to br-ing
about an anerdment of the ialv increasing the mzrximum tenn flom
20 to 99 yeals. The la11'was finally amended ir 1903 to a 50 }.ear
term, and iater to 'r 99 year-lerm. SholUy after. the la1y rvas amended
I made the llst lorlL tern leilse undel the ner. la\\.or) a tec lvhich I
bought on Sprirg stleet, Los ADgeles. This leasc I made to l{essls.
Sartori, I_Iellmanand GaIlarrd, usirg a folm \,,.hichI had brought flom
Chicago, aDd *'hich has been us€d in many of the most ihpoltant long
tern leases m^dc sirce then,
A book of several hurldred pages might be written oD the benefits
accruing to a state pelmitting the haking of long term leases. This
is amply illustl'ated by the nraDy fire buildings which have been built
on i€ased ground sinc€ the 20 year lease la.$'\ras amended, nal(ing
99 year leascs ralid.

ADVANTACD
TO THE OWNEROF A TDD
In many casesthe ownet. of a f€e is not firlancially abie to improve
his propelty with such :r building xs thc location $.alr.ants \,!.ilhout
assuning :1 heavv ercumblance, conseqLtenUyif he builds a ,,tax
paver'," or buikli)rg rl.ithin his nrears lvhich js not iD kecpine.\r.idr the
n€ighbolhood, he is Letler' off to rrxke ft lollg ter.m lease at a fair mte
of interest on a fait |alue of his fee, corditionally that the lesseecon-
structs a modeln buildirg such as the location ,.nd the futur.e growth
of the city warrants, fol then his ircome \l-ill be lully as much in
proportion {rom his fce as he would receivc flon his f€e and a small
improvement, besidesthe better building estabiishes the location and
value of his propcltt'fol-the futur-e.

ADVANTACD TO IJIJSSEE

A iessee,seculing a lease on a well located fee Dt a fair. rate of

interest on a fair value of the fee js sure to realize a good profit on his
inveFtmarrl.pro\ ided he er'.crs a modern bu:ldina in kp"oine wirh
rlr. -.jshborhood nnd t hp g, owt\ of t hp ciry, for as iho iep adva--..sin
 Ihe Reql,taBhR Boo,kof Calilornia t27

value renk advance in the same propoltion, consequently the lessee

is the beneficiary to ihe extent of the advancein value of the fee.
INI'ESTMENT
The ideat investmentis a well securedfee, for th€ lessorrecerves
a ixed income for a long pedod without worry or fear of the loss of
anv Dart of his principal. The lessee'sinvestmentof courseis specu_
ladiv;and dependson the gl owl,hot lhe neighborhood and the advance
of rents.
IDEAL FORM FOB FXE OWNER
The ideal leasefor the fee owner is a leasewith a minimum ffxed
reltal and a reappraisement provision. This fom, however, is' seldom
used,for the gro$'th of the fee herein inures to the fee owner, con_
sequentlythe lease having no speculalive value is seldommade ex_
ceritinsbv businessfirms needing cerlain land which cannot be
acouirid ouherwise. Cauhon shouldbe usedin making this form of
k;e Drovidinqthat the minimum rent be paid the lessotduring tle
term 6f leaseand the impoundingof any additional sum awardedby
the arbitrators or by any court until the lessor and lessee have
acceptedthis award or until the Supreme Court has ienalered a final
d€ciiion of any appraisernent or any award made by any lowet court.

. P&OFITABLE IN1ESTMENT FOR LESSEE

For the lesseeseeking a profitable investment a Iease providing
for a fiat rental in a growing city is the most desirable, still many
l@sesare $ritten providing for e graduated rental which have proven
srtisfactory and profitable.