Market Rent Adjustment Provisions in Long-Term Ground Leases

In this episode of Digging Into Land Use Law, Nossaman Real Estate Group Co-Chair David Graeler and associate Maya Hamouie discuss myriad problems that may arise when a market rent adjustment provision in a long-term ground lease is stated unclearly. David and Maya, along with guest speaker Scott Delahooke, MAI, review a recent market rent adjustment arbitration concerning a long-term ground lease, the key California case law at issue in the dispute, the different valuation approaches taken by the ground lessor and ground lessee, the differences in approaching valuations in California versus other jurisdictions and how the arbitration panel ruled. They also discuss ways to draft rent-adjustment provisions to more clearly lay out the adjustment process and to hopefully reduce the likelihood of litigation.​