It’s important to remember that additional procedures and processes may be required when selling or representing leasehold property. These procedures can extend the time needed for escrow.

You might need additional time if:

1. The Lessor, or Agent for the Lessor, is out of town. Escrow is often at the mercy of the Lessor/Agents day to day schedule and/or other obligations. Executing the necessary documents that are required may not be a priority.
2. Several Lessors use either Fey’s Canyon Financial or Joanne Allen & Associates to act as agents for their transactions. Each of these leases, and thereby the Agents who manage them, have many requirements, including reviewing and approving specific loan documentation, title report, contract, insurance, etc.. Fulfilling all of these additional requirements will add at least 3-5 days to your process, no matter how organized you are.
3. If you are obtaining a loan, it may be more complicated than a non-lease land transaction. In a standard transaction, the loan itself is the most complicated part of the process.  In an Indian Leased Land transaction, there may be loan restrictions imposed by the lease, which may dictate how much down payment is required, the length of the loan, and insurance liability requirements.    Their protocol may or may not require signing additional documents which will then be returned for the Lessor to review and approve. Obviously, this can add days onto the process.
4. The Buyer resides, or is presently located, outside of the country. In this instance, the timing can be delayed due to notary, going through the U.S. Consulates office, etc. Other issues may be present. What’s most important to know is that in this situation, even if it is an all cash deal, you won’t be able to have a rapid closing (5 days, for example) you won’t be able to within 5 days.
5. If the property is in foreclosure and owned by a Bank, the Bureau of Indian Affairs has additional requirements that can delay the process.

In subsequent posts, we’ll address the specific items or situations – rather than simply the process itself – that add more time to your escrow transaction time.

It’s important to realize that additional procedures are required when handling transactions on Indian Leased Land. We will go into further details on these procedures in future posts. For now, we want to define aspects of these unique transactions so you can understand what is involved and how it can affect the escrow process.

When you’re dealing with Indian Leased Land, it’s just that: a lease. The person leasing the property is the Lessee. Most of the properties on Indian Leased Land are owned individually by tribal members. They are considered to be the Lessors. All the leases are administered by the Bureau of Indian Affairs (BIA) which is part of the US Department of the Interior. The lease pays for long-term legal use of the land for the duration of the lease contract.

According to the BIA (which provided the information and details that follow) , there are more than 11,000 leases on land within the reservation boundaries. The leases generally fall into one of two categories:

Residential Leasing

• Master Lease
• Residential Sublease

Commercial Leasing

• Master Lease
• Commercial Sublease

Most of the leasing on the Agua Caliente Indian Reservation falls into the category of residential leasing.

Residential master leases are typically negotiated by developers on large tracts of land. After building single family residences or condominiums, developers then sublease the land to the individual homeowners.

If you are an individual homeowner leasing land from a developer you would hold what is commonly referred to as a Residential Sublease, whereas the developer who leased the land from the landowner would hold the Master Lease.

What’s the difference between “Trust” land and “Fee” land?

The term “Trust Land” refers to land held in trust by the United States for the beneficial use of an individual Indian landowner or Tribe. In contrast, “Fee” land is land not held in trust by the United States. Typically, when you buy real estate, you are buying the house and the land it sits upon. This is called “Fee” land. In contrast, “Trust” land is where you own the house, but lease the land underneath that is in Trust.

The U.S. Department of the Interior holds thousands of acres of land in “Trust” on behalf of the Agua Caliente Indian Tribe and the individual Indians of the Agua Caliente Band of Cahuilla Indians.

The U.S. Department of the Interior, through the BIA, has been designated by federal law as the “Trustee” of all Indian lands. As trustee, the BIA has a fiduciary responsibility to ensure Indian landowners receive fair consideration for the use of their land.

We’re often asked, if you have a residential sublease, does that mean the land is in “Trust”? The answer is: Not necessarily. Residential leasing is not exclusive to Indian Trust lands. In fact, developers in the Coachella Valley and elsewhere have purchased land in Fee, developed the property, and then leased the property to the landowners. When property is leased on Fee land the BIA does not have jurisdiction.

What is the role of the BIA?

The BIA-Palm Springs Agency provides technical assistance to Indian landowners on matters of real property management. The BIA also holds approval authority for leasing of Trust land on the Agua Caliente Indian Reservation.

The BIA does not represent developers, homeowners, or those who lease the land; however the Palm Springs Agency staff is available to answer questions regarding the leasing of federal trust lands on the Agua Caliente Indian Reservation.  It’s important to realize that Indian Lease Land is a multifaceted topic whose intricate details cannot be fully explained in one blog post. You should definitely consult with the BIA and an escrow officer – like one of ours – whose experience and expertise focuses specifically on Indian Lease Land transactions.

In future posts, we’ll inform you of the different title and lease options, as well as how to prepare for the different situations that may require more transaction time.  With these posts, Leesees will become more informed on the process of buying and selling with Indian Land Leasing Agents and Lessors.