What is a ground lease primarily characterized by?

A ground lease is primarily characterized by the separation of ownership between the land and any improvements made on that land, such as a building. In this arrangement, the landowner leases the land to a tenant for a long-term period, typically several decades, while the tenant has the right to develop the land or use it for commercial or residential purposes. This structure allows the tenant to construct buildings or make improvements without owning the land itself, which can provide significant financial leverage.

This concept is key in real estate; it allows for investment in development projects while the land remains under the ownership of the landlord. The landowner benefits from receiving regular lease payments and retains control over the land, while the tenant benefits from the use and potential revenue of the built structures. This distinctive feature of ownership separation underlies many commercial real estate transactions, particularly in urban settings.

The other options do not accurately reflect the primary nature of a ground lease. Ground leases do not imply ownership of both land and improvements, they are typically longer than five years, and they do not represent exclusive ownership of just the building without some rights over the land.