What is the difference between a land lease and a traditional lease?

A land lease is distinct from a traditional lease primarily in the focus of what is being leased. In a land lease, the tenant is leasing only the land itself, with the intention of developing it or placing their own structures on it. This arrangement is common in scenarios where the underlying land is owned by one party (the lessor) and the structures on the land are owned by another party (the lessee).

This contrasts with a traditional lease, where the tenant typically rents both the land and any existing structures on it, such as residential homes or commercial buildings. A traditional lease generally encompasses the rights to occupy and use the premises, including buildings, without any obligation for development or substantial modifications made by the tenant.

Understanding this fundamental difference clarifies how land leases might be utilized more in commercial or developmental contexts, while traditional leases are more prevalent in residential and standard commercial rental situations.