What is land readjustment?

Land readjustment is a physical redevelopment of property, where original property owners retain their property rights in a new, more valuable physical format in the future development.

 

It is an urban tool used widely around the world from agricultural and peri-urban settings to densely populated urban centers. Land readjustment applied to a suburban context can have many different applications and ownership structures. Described below is a land readjustment process that allows homeowners to ground lease their land to an investor for redevelopment. 

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[1] - EXISTING CONDITION

An area of geographically connected properties is identified for redevelopment. Typically, each property is individually owned.

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[2] - LAND COOPERATIVE FORMED

Property owners assemble their properties, creating a jointly owned land cooperative. Ownership percentage is based on property equity. 

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[3] - LAND REZONED

The land cooperative is rezoned into a mixed development. Land that will remain for the owners' residential use is delineated from commercial land, which will be ground leased to an investor. 

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[4] - CONDOMINIUM BUILT

Property owners engage an investor to finance and build a multi-family condominium for their personal use, in exchange for a "no fee"ground lease on the commercial land for a number of years.  

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[5] - GROUND LEASE BEGINS

The investor builds new commercial buildings on the land which are owned 100% by the investor. Once the "no fee" ground lease ends, the investor pays a ground lease to the original property owners. Once the ground lease expires, all improvements to the land, including the commercial buildings, belong to the original property owners.