Correction: An earlier version of this article misstated the nature of ground lease arrangements, suggesting they can be tailored to meet the financial situations of the lessee. While this may be true in some circumstances, this is not the case for the residents of Saddlerock Estates, and we did not intend to draw that parallel. In addition, a resident of Saddlerock Estates confirmed to JohnHart that earlier reports of plans to form an ROC or directly meet with representatives of the Agua Caliente Tribe are unfounded. We apologize for the error.
The old saying “a building is only as strong as its foundation” has taken on a bitter meaning in Palm Springs in recent weeks. There, specifically in the community of Saddlerock Estates, homeowners are clashing with landowners over a drastic hike in ground lease terms, including a shocking lease renewal fee of $100,000. You read that correctly, the homeowners are not the landowners. Rather, they’re leasing the ground their homes stand on from a member of the indigenous Agua Caliente Tribe.
Shining a Light on Local Tensions
Tensions between homeowners of Saddlerock Estates and a representative of the Agua Caliente Tribe have only been increasing over recent weeks, with news coverage seeming to highlight the conflict. KESQ News Channel 3’s I-Team drew attention to the issue, revealing details of the $100,000 lease renewal fee in addition to steeper monthly payments to satisfy the updated ground lease terms. And while, especially from the homeowners’ perspectives, this may seem unjust, it’s also perfectly legal. Authorities claim that the landowner is operating within his rights, leaving Saddlerock Estates’ residents in a self-described “land-lease limbo.”
NBC Palm Springs also paid a visit to Saddlerock Estates, interviewing frustrated homeowners who claimed that the older community members simply getting by on fixed incomes will have no way to weather the coming financial storm. It could end with the displacement of an entire community who have called the neighborhood home for years.
Ground Lease Arrangements Are Common – and Confusing
Ground lease situations are nothing new in California. Yet, ground leases, sometimes also called land leases, tend to be mired in uncertainty come renewal time. And the situation in Saddlerock Estates is only serving to heighten insecurities around ground lease arrangements.
Often, the lessees are in the dark as to how often lease terms can change. And, perhaps even more crucially, what legal recourse they have (if any) should a landowner refuse to offer the option to renew. Further up north in Fresno, embattled mobile-home residents fought against relentless land lease hikes, establishing their own take on rent stabilization. Now, some neighborhoods are capped at just north of a 6% annual increase.
But even outside of the state, similar problems are plaguing homeowners in similar situations. For example, in Washington State’s Royalwood Estates, tenants have had to endure over 30% in rent hikes in just one year. And though they’ve attempted legal recourse with House Bill 2114, the effort stalled in the Senate.
So, if this is nothing new, how is this news? Because the residents of Saddlerock Estates are challenging the landowner, citing an imbalance that they say is unjust to the people who have called the area home for decades. Homeowners are left wondering why they’re paying tax on land they don’t own, on top of monthly dues and a lofty lease renewal charge unlike any received before. But this sudden surge in costs, along with the general unpredictability of the ground lease terms, has left these longtime residents losing sleep over foreclosures, forced resales, and, ultimately, displacement.
A Cautionary Tale of Ground Lease Reliance
However, there is no guarantee that an agreement can be reached that will leave all sides smiling. And the Agua Caliente Tribe clearly has the upper hand. With heightened attention on the conflict, perhaps the situation is most beneficial for anyone considering a ground lease who hasn’t quite thought through the complexities that come along with it. As the residents of Saddlerock Estates weigh their home equity against a $100,000 signing fee, their unfortunate misstep could at the very least be a learning experience for other Californians.
However, Palm Springs could also be ground zero for reform when it comes to the way ground lease arrangements are handled across the state. Maybe housing affordability, tenant rights, and lease renewal standards as well. Until then, we’re left to mull over the legal truth: owning a home only goes so far when you don’t own the ground beneath it.
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