Selling a Hangar Lease

luvflyin

luvflyin

Touchdown! Greaser!
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Luvflyin
I’m selling my hangar. It’s a long term lease, 99 years, renewable once so it’s like a 200 year lease. I have an offer, $125,000. $20,000 down, then monthly payments for 5 years. How is that done? I’ve sold property before with owner financing with a Note and Trust Deed. Did a Mortgage once. But a Trust Deed or Mortgage wouldn’t work here because I don’t ‘own’ it. Would I just do a Note and let it go at that, or should there be something else?
 
Is there an association or are you a one off contract with the airport? You do own it, just not in the fee simple type that you’re accustomed to. You could contact a title company to ask if it’s something they could handle in escrow.
 
mandm said:
Is there an association or are you a one off contract with the airport? You do own it, just not in the fee simple type that you’re accustomed to. You could contact a title company to ask if it’s something they could handle in escrow.
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It's just me.
 
i assume that you have checked the land lease and you can do that under that contract. when I sold my fathers hanger that's the first thing i checked was the procedure to transfer the land lease. in his case there was no procedure to transfer the lease, but the airport manger assured me they would sign a new lease with whoever i sold it to at at the same rate and a new 30 year term.
 
luvflyin said:
Hey. You're an Aviation Real Estate Broker. Have you ever handled something like this before?
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Yes, I specialize in Aviation Real Estate. To answer your question, it depends. It’s up to the airport if they will allow the property to be mortgaged. If so, a mortgage and note should be fine. Some states, like Colorado require a Deed of Trust vs mortgage.

Happy to assist if needed.
 
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Flocker said:
Yes, I specialize in Aviation Real Estate. To answer your question, it depends. It’s up the airport if they will allow the property to be mortgaged. If so, a mortgage and note should be fine. Some states, like Colorado require a Deed of Trust vs mortgage.

Happy to assist if needed.
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Thanks for the offer but I know how it’s done now. Assignment of Lease and a Note. It’s in Oregon.
 
You can take a leasehold mortgage/deed of trust, it's fairly common in commercial real estate. It's just an interest in the land, even if not the fee interest. Get a lawyer involved to draft, but shouldn't be a heavy lift. If you have to foreclose, you just foreclose on the leasehold vs. the fee interest. As noted, you do need to review the ground lease for assignment provisions, but should be pretty straightforward.
 
bradg33 said:
You can take a leasehold mortgage/deed of trust, it's fairly common in commercial real estate. It's just an interest in the land, even if not the fee interest. Get a lawyer involved to draft, but shouldn't be a heavy lift. If you have to foreclose, you just foreclose on the leasehold vs. the fee interest. As noted, you do need to review the ground lease for assignment provisions, but should be pretty straightforward.
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Thanks for the input. We are just executing an Assignment of Lease and a Promissory Note.
 
luvflyin said:
Thanks for the input. We are just executing an Assignment of Lease and a Promissory Note.
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So how are you securing the Promissory Note? Are you holding the ground lease assignment until the note is paid in full?
 
bradg33 said:
So how are you securing the Promissory Note? Are you holding the ground lease assignment until the note is paid in full?
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The Lease is Assigned to them now, I don't have it anymore. So yeah, the Note isn't secured by anything tangible. If they default I will have to sue. Would probably have to do that anyway if I did still hold the Lease. I don't think there is any Non Judicial way to foreclose a Lease like there is with a Trust Deed. That would be interesting, auctioning off a Lease on the Courthouse steps.
 
luvflyin said:
The Lease is Assigned to them now, I don't have it anymore. So yeah, the Note isn't secured by anything tangible. If they default I will have to sue. Would probably have to do that anyway if I did still hold the Lease. I don't think there is any Non Judicial way to foreclose a Lease like there is with a Trust Deed. That would be interesting, auctioning off a Lease on the Courthouse steps.
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Sounds like the ship already sailed, but you can use a deed of trust for a leasehold and foreclose it the exact same way. So yes, you basically sell the leasehold interest on the courthouse steps just like you would the ownership/fee interest in any other property.
 
bradg33 said:
Sounds like the ship already sailed, but you can use a deed of trust for a leasehold and foreclose it the exact same way. So yes, you basically sell the leasehold interest on the courthouse steps just like you would the ownership/fee interest in any other property.
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It hasn't sailed yet but the engines are started up, the deck hands are standing by and the tug is on the way. Signing is at 4, it's 12 thirty now. All in all this is a better way for me. The Note is in a way secured by something tangible, the $20,000 down payment. Another thing I like about this way is my relationship with the Airport is severed. If I was still the Lessee then I would be responsible to the Airport for maintenance fees, utilities, insurance, taxes and all that jazz.
 
Not sure the terms of your particular lease, but I know all land leases on our airport require the Airport Commission's written consent to any assignment of the lease. They have never withheld as such, but it at least creates a paper trail so the Airport has documentation of the assignment, and I suppose could prevent someone from assigning a lease to a non-aviation user and avoid issues with non-aeronautical use of the hangar.
 
20k down +1700 a month for a hangar? Yikes.
 
unsafervguy said:
in his case there was no procedure to transfer the lease, but the airport manger assured me they would sign a new lease with whoever i sold it to at at the same rate and a new 30 year term.
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Really? So if it gets sold, the lease starts over? I guess it depends how it's written, but generally the buyer would only get whatever is left on the original lease and the sales price would essentially be prorated accordingly.
 
midwestpa24 said:
Not sure the terms of your particular lease, but I know all land leases on our airport require the Airport Commission's written consent to any assignment of the lease. They have never withheld as such, but it at least creates a paper trail so the Airport has documentation of the assignment, and I suppose could prevent someone from assigning a lease to a non-aviation user and avoid issues with non-aeronautical use of the hangar.
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This is a privately owned airport. The terms of the Lease allow assignment. They want a Memorandum of Assignment recorded. That I got from a phone call. I’d have to go look at the Lease again to see if that ‘recording’ thing is there.
 
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