Rent Adjustment in Ground Leases

Summary

This practice note explains the various approaches to the adjustment of rent over the term of a ground lease and describes five approaches to rent adjustment: fixed, percentage, tied to index, fair market rent determined by appraisal, and fair market rent determined by arbitration, including baseball arbitration. The note also addresses procedures for conducting an appraisal and using an appraisal process as a part of an arbitration process to determine fair market rent as well as the appropriate standard of judicial review. The common negotiating positions of both the landlord and the tenant are provided.