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Long-term ground leases often run for a term
of 99 years. Did you even wonder why such an odd number seems
to appear so frequently in leases? Why not make leases to
an even term of 100 years? Is there some principle of law
that limits leases to a maximum of 99 years?
Statutes
A few states have enacted statutes limiting the length of
lessee to 99 years. For example, Alabama limits all leases
to a maximum of 99 years, and Nevada provides the same limit
for all leases other than agricultural leases (which cannot
exceed 25 years). California, North Dakota, and South Dakota
limit leases of city lots to 99 years, and Illinois and Wisconsin
limit certain leases by municipalities or governmental units
to 99 years. A number of states have shorter limits for particular
kinds of leases. For example, California limits agricultural
leases to 51 years, Minnesota limits agricultural leases to
21 years, and Montana limits agricultural leases to 10 years
and leases of city lots to 75 years.
General Rule
In the absence of a state statute to the contrary, there appears
to be no limit on the permissible length of a lease. The leading
case on the subject states:
"There being no statute in this state to the contrary,
the law permitted the lease notwithstanding its length of
two thousand years."
Now that's a long lease!
This raises an interesting question: Can two parties enter
into a lease that runs forever? Some courts have stated that
perpetual leases are not favored and will not be enforced
unless it is clear the parties intended the lease to run forever.
However, is does not appear that any American court has ever
flatly stated that perpetual leases are not enforceable if
the intention of the parties is clear.
Conclusion
In most states there is no limit on the length of the lease.
The parties are free to contract for whatever term they desire.
In most cases, the 99-year term appears to be more of a custom
than a legal requirement. If you are not sure whether there
is a statutory limit in your state, be sure to check with
local counsel before entering into a long-term lease, because
leases in excess of the legal limit may be void.
The Delaware case mentioned above is Monbar, Inc. v. Monaghan,
18 Del.Ch. 395,398, 162 A. 50, 52 (1932).
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