Understanding Land Leases in Coastal Orange County: What Buyers Should Know

If you have been browsing real estate in Coastal Orange County, you may have come across homes or condos "on leased land." If you're wondering what that means, and whether it's something to avoid or consider, you're not alone.

In this post, we will explain what a land lease is, where they exist in Dana Point, Laguna Niguel, Laguna Beach, Corona del Mar, and Newport Beach, and what it really means for homeowners in 2025.

What Is a Land Lease?

In traditional real estate, you own both the home and the land it sits on. In a land lease, you own the structure, like a house or condo, but lease the land underneath it from another entity. This could be a city, a private trust, or a long-term landowner.

Land leases typically have terms that range from 20 to 99 years. While they can make a property more affordable at the time of purchase, there are ongoing lease payments, and financing can be more complicated. Some buyers avoid them due to uncertainty about future lease terms, while others view them as a way to buy in a prime location at a lower upfront cost.

Land Leases in Coastal Orange County: Where Do Land Leases Exist?

Land leases are uncommon but do exist in specific communities in the coastal cities of Orange County. Here's a breakdown of where you can find them:

Newport Beach

Beacon Bay

1. Landowner: City of Newport Beach

2. Lease Terms: Buyers receive a new 50-year lease with the city

3. Payment: Annual rent equals 2.5% of the purchase price, adjusted annually based on the Consumer Price Index

4. Other Costs: Lessee is responsible for all real and personal property taxes

5. Insight: Long lease terms and harbor-front location appeal to lifestyle buyers despite the lease structure

The Bluffs

• Status: Many units have converted to fee simple ownership

• Lease Cost (if applicable): $300 to $600 per month

• Buyout Option: Varies by lot; one recent offer was $400,000

• Insight: Many buyers opt to buy out the lease, gaining full ownership of the land

Lido Peninsula (Manufactured Homes)

• Lease Cost: $3,000 or more per month depending on lot

• Insight: Offers a resort lifestyle with high lease fees due to location and amenities

Laguna Beach

Laguna Ocean Vista Condos

• Lease Cost: $22 per month

• Included In: HOA dues of $696 per month

• Insight: Minimal lease cost wrapped into association dues, making it more appealing

Laguna Seacrest

• Lease Cost: Estimated $300 per month

• Adjustment: Every 5 years

• Insight: Predictable lease cost structure, though future increases are expected

Manufactured Homes

• Lease Cost: Over $30,000 per year in some cases

• Insight: High annual land lease costs, though purchase prices for the homes can be lower

Dana Point, Laguna Niguel, and Corona del Mar

These areas do not have significant land lease neighborhoods at this time. Most homes in these cities are fee simple, which means the buyer owns both the home and the land.

Why Does Coastal OC Have Land Leases?

In most cases, land leases in Coastal OC go back decades. They are tied to city-owned land, family trusts, or long-term legacy ownership. For example, in Beacon Bay, the land is owned by the City of Newport Beach. The lease structure was designed to let residents live in a waterfront community without ever selling the land.

In Lido Peninsula, homes lease from a private landowner. The goal is to preserve long-term control of the land while allowing residents to enjoy a highly desirable location.

For condos and manufactured homes, land leases were often introduced to reduce upfront purchase prices and allow development on land that would otherwise be inaccessible.

What Are the Risks of Buying a Home on Leased Land?

Land lease homes can offer great locations at lower prices, but there are several important factors to consider:

• Financing limitations: Not all lenders offer loans on leased land, especially if the lease term is under 30 years

• Additional monthly cost: Lease payments can range from $22 to over $3,000 per month

• Uncertainty at lease renewal: Future terms may be more expensive or difficult to negotiate

• Impact on resale value: A smaller pool of buyers may limit demand and future value

When Does a Land Lease Make Sense?

For some buyers, a home on leased land makes sense. This includes second-home buyers, those looking for a more affordable way to enjoy a beachside location, or people who are less focused on long-term equity and more focused on lifestyle.

In some cases, the lease costs are low or included in HOA dues. In others, buyers may plan to buy out the lease later to gain full ownership.

Final Thoughts

Land leases are a unique part of Coastal Orange County real estate. While they come with added complexity, they also offer buyers the chance to live in some of the most desirable neighborhoods in Southern California.

If you're considering a home on leased land in Newport Beach, Laguna Beach, or beyond, understanding the details of the lease is essential. Not every buyer will find it the right fit, but for the right situation, a land lease property can offer great value and lifestyle.

Have questions about land leases in your target neighborhood? Let's talk.