What is Indian Lease Land?
Did you know we live on a checkerboard in the Coachella Valley? It’s true. Click here to see the map from the U.S. Department of the Interior for Indian Affairs that proves it. Back in 1876, the United States Government paved the way for the Pacific Railroad to come through the area by marking much of the Coachella Valley with a giant checkerboard, deeding every other square for ten miles on either side of the railroad right of way to the Pacific Railroad. The other squares were deeded to the Agua Caliente tribe.
This creates a fairly unique situation. When you purchase a house in most of the United States, you’re buying the house and the land it sits on. This is called Fee Simple Land. When you purchase a house that’s located in one of the squares deeded to the Agua Caliente tribe, you're buying the house and taking possession of a long term lease that gives you the right to use and occupy the property in exchange for rent. A very long term lease. Although an Indian land lease on the Agua Caliente Indian Reservation may be negotiated for any period of time, it’s not unusual to find yourself in a 99 year lease. This is called Indian Lease Land.
What does this mean for your property values? Actually, not much. When home prices in the Palm Springs area go up, they go up for everyone. When they go down, they go down for everyone, too. The big difference involves your initial outlay. With Indian Lease Land, you can typically get more house for less money; since you aren’t actually buying the land, you’ll pay 15% - 25% less for your home.
With this money-saving aspect in mind, when you look at comps - comparison properties - and their value, be sure to compare apples to apples and compare homes on Indian Lease Land to other lease land properties. Comparing a less expensive Indian Lease Land home to a more expensive Fee Simple home can leave you with an unplanned expense: Annual land rent payments generally range from $1400 to $8000, depending on the property. Some leases are divided and paid monthly, while others are paid in one lump sum.
Before purchasing a property on Indian Lease Land, you’ll need to know more about your particular lease. You can easily check here to see how much longer the lease for your possible property is in effect. Only five years left? Contact the Palm Springs Agency of Indian Affairs to find out the details on a lease extension. Regardless of the length of time left on the lease, contact them to find out if the lease has a built-in escalation clause or includes lease increases based on the Consumer Price Index. Don’t just rely on word of mouth from the neighbors - know the exact information regarding the term of YOUR lease and any increases in lease fees.
Another big advantage of owning a property on Indian Lease Land comes at tax time since you’ll only be paying tax on the structure and not the land. Check with the Riverside County Assessor to be certain that this applies to your specific property. This is an informational blog only and shouldn’t be considered as legal or tax advice.
You can get a mortgage to help you purchase your Indian Lease Land home. Some parts of the process can get a little sticky, but that’s where working with an experienced local realtor really comes in handy. I know mortgage lenders who are very familiar with the small details it takes to get your mortgage documents processed smoothly and accepted by the County Recorder’s Office.
For the most part, having an Indian Lease Land property is much like being on Fee Simple Land. You get to sell or bequeath your home whenever you want to. You get to make changes to your home to make it reflect you and your tastes. And you get to be part of a historical land event that is unique to the Coachella Valley.
Whether you decide to get more homes with Indian Lease Land or want to own the land with property on Fee Simple Land, I’m the realtor for you. Contact me. I’m Stephen Burchard, The Desert Bowtie Realtor, taking the (k)nots out of real estate.