Updated September 28, 2026
Yes, but be precise about what you're actually selling: a leasehold interest, not the land underneath it. Someone else owns the dirt and leases it to whoever owns the improvements — the apartments, the income they generate. You can sell that leasehold interest to a buyer, who steps into your shoes as tenant of the ground lease and owner of the building. What you can't do is sell the fee, because you never owned it.
This is different from selling a building owned through an LLC or any ordinary fee-simple sale, where the buyer gets outright ownership of land and building together. Here, the buyer's ownership has a shelf life and a landlord — the ground lessor — whose lease terms shape almost everything about the deal.
Most buyers in LA multifamily are conditioned to think in fee-simple terms — buy the land and building together, hold indefinitely, sell whenever they want. A leasehold asks a buyer to underwrite something more complicated: how much term is left, what the rent resets look like, and whether financing is even available at all. Many conventional lenders are far more conservative — or unwilling — to lend against a leasehold than a fee interest, which narrows the pool to cash buyers, specialized leasehold lenders, or sophisticated investors.
That smaller pool doesn't mean the building is unsellable. It means the marketing has to find the right subset of buyers rather than assuming the general buyer universe applies.
Remaining term on the ground lease. This is the single biggest value driver. A leasehold with fifty years remaining behaves much more like a fee interest than one with ten years left, where the approaching reversion of the improvements to the landowner starts to dominate the valuation math.
Ground rent and how it resets. Ground leases typically escalate on a schedule, and many include periodic resets tied to the value of the land itself, sometimes producing a significant rent jump at the reset date. A buyer's underwriting has to model those resets, not just today's rent.
Renewal or extension rights, if any. A leasehold interest that includes options to extend the term is worth meaningfully more than one without, because it pushes the reversion risk further into the future — or removes it as a near-term concern entirely.
What happens to the building at the end of the term. Some ground leases require the improvements to be surrendered to the landowner at no cost when the lease ends; others provide for compensation. This single clause can be the difference between a leasehold that behaves like ownership and one that behaves like a very long-term rental.
The ground lease itself, in full, not a summary — a buyer's attorney will read every clause, so know what it says before their counsel finds something you didn't.
Confirmation of the landowner's consent requirements. Most ground leases require consent to an assignment, sometimes with a right of first refusal. Skipping this is one of the more common ways a leasehold sale stalls late in escrow.
A clear picture of remaining term and rent reset mechanics, summarized in plain language rather than buried in the lease's own formula.
Evidence you're current on ground rent and every other obligation to the landowner. A default here is a bigger problem for a buyer than a default under an ordinary mortgage, because it can jeopardize the leasehold itself.
Because financing is more constrained, cash buyers and specialized leasehold lenders play a larger role than in a typical fee-simple sale. That tends to compress pricing relative to a comparable fee-simple building, roughly in proportion to how much term is left and how favorable the lease terms are. There's no way to state that discount as a fixed number — it depends on the specific lease — but it's an expected feature of leasehold pricing, not a sign something has gone wrong.
Beyond the ground-lease-specific issues, the transaction runs on the same fundamentals as selling any LA multifamily property: honest pricing based on actual fair market value, a prepared information package, and marketing aimed at buyers who price leasehold risk correctly rather than the general pool. The assignment of the lease is the legal mechanism that makes the transfer happen, and getting the landowner's consent lined up early — rather than discovering the requirement in escrow — keeps the timeline from stalling.
A ground lease doesn't make a building unsellable; it makes it a different asset than the fee-simple buildings most people picture. Owners who understand that distinction early, gather the lease documentation before listing, and market to buyers who know how to price leasehold risk get a clean sale. Owners who market it like an ordinary building, and let a buyer discover the ground lease mid-diligence, lose leverage they didn't need to lose.
Can a leasehold building get a conventional mortgage?
Sometimes, but many conventional lenders are cautious about lending against a leasehold, particularly as the remaining term shortens. Specialized lenders exist for this exact situation, which is part of why the buyer pool differs from a fee-simple sale.
Does the ground lease automatically transfer to my buyer?
Not automatically — most ground leases require the landowner's written consent to assign the leasehold to a new tenant, sometimes with specific conditions attached. Confirm this requirement and start the consent process early.
What happens to the building when the ground lease term ends?
It depends entirely on what the lease says. Some leases require the improvements to revert to the landowner without compensation; others provide for a buyout or extension rights. Read this clause carefully — it materially affects value as the remaining term shortens.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap.
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