07 May Indian Leased Land Escrows | Part 1
In the Coachella Valley, we often handle real estate escrows for property that is located on Indian Leased Land. The Bureau of Indian Affairs-Palm Springs Agency, has federal jurisdiction over the land on the Agua Caliente Indian Reservation. This reservation encompasses approximately 28,000 acres in the western Coachella Valley, including portions of Palm Springs, Cathedral City, Rancho Mirage and unincorporated Riverside County.
It’s important to realize that additional procedures are required when handling transactions on Indian Leased Land. We will go into further details on these procedures in future posts. For now, we want to define aspects of these unique transactions so you can understand what is involved and how it can affect the escrow process.
When you’re dealing with Indian Leased Land, it’s just that: a lease. The person leasing the property is the Lessee. Most of the properties on Indian Leased Land are owned individually by tribal members. They are considered to be the Lessors. All the leases are administered by the Bureau of Indian Affairs (BIA) which is part of the US Department of the Interior. The lease pays for long-term legal use of the land for the duration of the lease contract.
According to the BIA (which provided the information and details that follow) , there are more than 11,000 leases on land within the reservation boundaries. The leases generally fall into one of two categories:
- Master Lease
- Residential Sublease
- Master Lease
- Commercial Sublease
Most of the leasing on the Agua Caliente Indian Reservation falls into the category of residential leasing.
Residential master leases are typically negotiated by developers on large tracts of land. After building single family residences or condominiums, developers then sublease the land to the individual homeowners.
If you are an individual homeowner leasing land from a developer you would hold what is commonly referred to as a Residential Sublease, whereas the developer who leased the land from the landowner would hold the Master Lease.
What’s the difference between “Trust” land and “Fee” land?
The term “Trust Land” refers to land held in trust by the United States for the beneficial use of an individual Indian landowner or Tribe. In contrast, “Fee” land is land not held in trust by the United States. Typically, when you buy real estate, you are buying the house and the land it sits upon. This is called “Fee” land. In contrast, “Trust” land is where you own the house, but lease the land underneath that is in Trust.
The U.S. Department of the Interior holds thousands of acres of land in “Trust” on behalf of the Agua Caliente Indian Tribe and the individual Indians of the Agua Caliente Band of Cahuilla Indians.
The U.S. Department of the Interior, through the BIA, has been designated by federal law as the “Trustee” of all Indian lands. As trustee, the BIA has a fiduciary responsibility to ensure Indian landowners receive fair consideration for the use of their land.
We’re often asked, if you have a residential sublease, does that mean the land is in “Trust”? The answer is: Not necessarily. Residential leasing is not exclusive to Indian Trust lands. In fact, developers in the Coachella Valley and elsewhere have purchased land in Fee, developed the property, and then leased the property to the landowners. When property is leased on Fee land the BIA does not have jurisdiction.
What is the role of the BIA?
The BIA-Palm Springs Agency provides technical assistance to Indian landowners on matters of real property management. The BIA also holds approval authority for leasing of Trust land on the Agua Caliente Indian Reservation.
The BIA does not represent developers, homeowners, or those who lease the land; however the Palm Springs Agency staff is available to answer questions regarding the leasing of federal trust lands on the Agua Caliente Indian Reservation. It’s important to realize that Indian Lease Land is a multifaceted topic whose intricate details cannot be fully explained in one blog post. You should definitely consult with the BIA and an escrow officer – like one of ours – whose experience and expertise focuses specifically on Indian Lease Land transactions.
In future posts, we’ll inform you of the different title and lease options, as well as how to prepare for the different situations that may require more transaction time. With these posts, Leesees will become more informed on the process of buying and selling with Indian Land Leasing Agents and Lessors.
For more information on the BIA, please click here.