Navarre Beach & Pensacola Beach Land Leases Explained

What buyers, sellers, and homeowners need to know about land leases, mortgage financing, resale, and the 99-year lease structure in Northwest Florida

Quick takeaway: Leasehold property can be perfectly workable, but buyers need to understand the individual lease—not just the house. On Navarre Beach and Pensacola Beach, the remaining lease term can affect financing today and marketability years from now.

Navarre Beach & Pensacola Beach land leases are different from traditional fee-simple ownership. Most homebuyers assume that when they purchase a house, condominium, or commercial property, they are purchasing both the improvements and the land underneath them. That is not always the case.

Across the United States, there are communities where homeowners purchase a home or other improvements while the underlying land remains owned by another party. The homeowner receives the right to use the land under a long-term ground lease. This type of ownership is generally referred to as leasehold ownership, as opposed to fee simple ownership.

While leasehold properties exist throughout the country, this article takes a closer look at two unusual and often misunderstood leasehold markets in Northwest Florida: Navarre Beach and Pensacola Beach. Understanding Navarre Beach & Pensacola Beach land leases can help buyers evaluate annual costs, property taxes, mortgage eligibility, refinancing, resale, and long-term marketability.

Fee Simple vs. Leasehold Ownership

With traditional fee simple ownership, the buyer generally owns both the building and the land beneath it.

With a leasehold property, ownership is divided. The buyer may own the home or improvements, while another person, company, government entity, institution, or Native American tribe owns the land. The leaseholder pays for the right to use that land under the terms of a lease.

Some land leases extend for many decades. Others may have considerably less time remaining when a property is offered for sale. That remaining term can become extremely important—especially when a buyer needs mortgage financing.

Why Would Someone Buy a Home Without Buying the Land?

Price is often one of the attractions. Because the buyer is not purchasing the underlying land, a leasehold property may sell for less than a comparable fee-simple property in the same market.

But comparing sales prices alone can be misleading. A buyer also needs to consider:

The monthly or annual land-lease payment
How frequently the ground rent or lease fee can increase
How future increases are calculated
The remaining term of the lease
Renewal or extension provisions
Transfer and assignment restrictions
Mortgage financing requirements
Refinancing and resale implications
What happens to the improvements when the lease eventually expires

A $350,000 leasehold property is not automatically a better financial deal than a $450,000 fee-simple property simply because the purchase price is $100,000 lower. The terms of the land lease matter.

Where Are Leasehold Properties Found?

Leasehold ownership is not limited to one part of the country. Buyers can encounter ground leases in resort communities, on tribal lands, in older urban ground-rent systems, in manufactured-home communities, and in certain master-planned developments.

Area	Common Leasehold Situation
Pensacola Beach, Florida	County-administered leasehold properties on Santa Rosa Island.
Navarre Beach, Florida	Individual leases/subleases under the Santa Rosa County leasehold structure.
Palm Springs area, California	Leasehold properties on Agua Caliente tribal land, including parts of Palm Springs, Cathedral City, and Rancho Mirage.
Hawaii	Long history of residential and condominium leasehold ownership, particularly on Oahu.
Western tribal lands	Residential ground leases can be found on tribal lands in states including Arizona, New Mexico, Nevada, Washington, Oregon, and Montana.
Baltimore, Maryland	Historic ground-rent system; legally distinct from many conventional residential leaseholds.
Nationwide	Manufactured-home communities and some resort, golf, retirement, and master-planned communities may use land leases.

The important lesson is simple: the house and the land should never automatically be assumed to have the same ownership.

The Question Every Buyer Should Ask: When Does the Lease Expire?

The expiration date of a land lease can have enormous consequences. A property with 70 years remaining on its lease presents a very different financing and resale situation from one with only 20 or 30 years remaining.

Mortgage programs and lenders may have specific requirements concerning the remaining term of a lease. A property that is readily financeable today may become more difficult to finance as the lease approaches its stated expiration date. That can affect not only today’s buyer, but also the future buyer who may purchase the property years from now.

Can You Get a Mortgage on a Leasehold Property?

Potentially, yes. Leasehold properties are not automatically ineligible for mortgage financing. However, the lender must evaluate both the real estate and the leasehold interest.

Depending on the mortgage program and circumstances, the lender may need to review the remaining lease term, ground rent, transferability, lease provisions, title requirements, and the lender’s rights if the borrower defaults. This is one reason buyers should investigate the lease before getting too far into a transaction.

What Happens When a Land Lease Expires?

There is no universal answer. It depends on the actual lease. A lease may contain renewal or extension provisions. The parties may negotiate an extension. Other agreements may specify what happens to buildings or improvements when the lease terminates.

Never assume that a lease will simply renew on acceptable terms. The actual recorded lease, assignments, amendments, and renewal documents should be reviewed.

Can Ground Rent Increase?

Absolutely—depending on the lease. Some leases establish predetermined increases. Others may periodically reset rent according to a formula, appraisal, land value, inflation measure, rental income, or another mechanism.

A buyer therefore should not ask only, “What is the land-lease payment today?” The better question is, “What can this payment become during the years I expect to own the property?”

How Navarre Beach & Pensacola Beach Land Leases Work

Two of the most interesting examples of leasehold property in the United States are Pensacola Beach and Navarre Beach, Florida. Both are located on Santa Rosa Island, but they are in different counties and developed under related—but not identical—leasehold structures.

Unlike most residential communities in Florida, where buyers typically purchase property in fee simple, properties on these portions of Santa Rosa Island developed under long-term leasehold arrangements.

How the Leasehold System Began

In 1947, the United States conveyed portions of Santa Rosa Island to Escambia County. The federal conveyance contained important restrictions on the land. Escambia County was permitted to use the property for purposes it considered to be in the public interest and to lease portions of the island, while the conveyance restricted ordinary fee-simple disposition of the land.

Pensacola Beach subsequently developed through individual leases issued under Escambia County and the Santa Rosa Island Authority.

Navarre Beach has an additional layer. In 1956, Escambia County leased the Navarre Beach portion of Santa Rosa Island to Santa Rosa County. That lease had an initial 99-year term with automatic renewal provisions for additional 99-year periods. Santa Rosa County then issued individual leases and subleases covering residential lots, homes, condominiums, commercial properties, and other parcels throughout Navarre Beach.

Because the individual property leases began or were amended at different times, two properties sitting next to one another may have different lease dates, fees, assignments, amendments, and renewal language.

The Lease for Each Property Matters

There is not simply one document that governs every privately occupied property on Pensacola Beach or Navarre Beach. Each property has its own leasehold history, which may include an original lease, assignments, amendments, modifications, extensions, and other recorded documents.

The individual lease may establish:

The beginning and expiration dates of the lease
Renewal or extension rights
Annual lease fees
Variable lease payments
Transfer and assignment provisions
Rights and obligations of the leaseholder
Restrictions on use of the property

For many years, lease fees varied substantially depending on the particular agreement. In Navarre Beach, Santa Rosa County authorized amendments in 2016 that established annual lease fees of $250 for fixed leases and capped certain variable lease fees at $250 annually for leaseholders who completed the amendment process.

That is why buyers should review the actual lease applicable to the property rather than assuming every parcel on the beach has identical terms.

Property Taxes and Lease Fees Are Separate Issues

Another source of confusion is the difference between property taxes and lease payments. Owning a leasehold interest does not necessarily mean the property is exempt from ad valorem taxation.

The taxation of Santa Rosa Island leasehold properties has been the subject of decades of litigation, and the treatment of a particular property can depend on the applicable lease and legal history. Buyers should not assume that paying a land-lease fee replaces a property-tax obligation.

Depending on the property and lease, an owner may have both ad valorem property taxes and annual lease payments or other amounts required under the individual lease. Those are separate costs that should be verified before purchase.

Mortgage Financing for Navarre Beach & Pensacola Beach Land Leases

Yes—but the remaining term of the individual land lease matters.

As of 2026, Fannie Mae requires a leasehold estate to have an unexpired term that exceeds the maturity date of the mortgage by at least five years. Conventional lenders must also satisfy the applicable investor and loan-program requirements for the specific transaction.

In practical terms, a new 30-year mortgage generally requires at least 35 years remaining on the lease when this five-year standard applies.

This creates a growing issue for some Santa Rosa Island properties. Many individual leases originated during the 1950s and 1960s. As those original 99-year terms move closer to their stated expiration dates, some leases can become too short to support a new 30-year conventional mortgage unless an acceptable extension, renewal, amendment, or other documentation satisfies the lender and investor.

Example: If an individual lease expires 30 years from today, a new 30-year mortgage would extend to the same date as the lease—not five years beyond it. Under Fannie Mae’s current standard, that lease term would be insufficient unless the transaction qualifies through an acceptable extension, renewal, exception, or other compliant structure.

A shorter mortgage term can present a different calculation. For example, a 20-year loan subject to the same five-year rule would generally require the lease to extend at least 25 years beyond the closing date. That does not mean every lender will approve the loan; it simply illustrates why the remaining lease term and the requested mortgage term need to be evaluated together.

“But the Lease Is Perpetual”

This is where local understanding of the lease and secondary-market mortgage requirements can collide.

The master arrangements governing portions of Santa Rosa Island contain renewal provisions, and the Navarre Beach prime lease between Escambia County and Santa Rosa County provided for an initial 99-year term that was automatically renewable for an additional 99 years, with provisions contemplating further renewals.

From the standpoint of a homeowner, that may sound as though the issue is already resolved. From the standpoint of a mortgage lender selling a loan into the secondary market, however, the lender must document that the leasehold estate securing that particular mortgage satisfies the applicable investor requirements.

A general understanding that the underlying county arrangement is perpetually renewable may not necessarily substitute for acceptable, enforceable language in the recorded lease, amendment, renewal, or other documentation applicable to the individual property. That distinction becomes more important as older individual leases approach their stated expiration dates.

Thinking About Selling? The Lease Term Can Matter Long Before It Expires

A lease does not have to be close to expiration before it can begin affecting a property owner. The problem can appear decades earlier because mortgage investors look at how far the lease extends beyond the maturity date of the new loan.

Consider a property with 38 years remaining on its lease. Today, it may still satisfy a 35-year minimum needed for a new 30-year mortgage under a five-year-beyond-maturity standard. Ten years from now, however, the same property would have only 28 years remaining. The home itself may be unchanged, but the financing options available to the next buyer could be very different.

If fewer buyers can qualify for conventional financing, the pool of potential purchasers can shrink. That can influence marketability, days on market, appraisal analysis, buyer demand, refinancing options, and ultimately value.

This is why current owners should not view lease expiration as a problem that begins only in the final few years of the lease. The financing impact can arrive much earlier.

What Buyers Should Review About Navarre Beach & Pensacola Beach Land Leases

Before purchasing a leasehold property—especially on Navarre Beach or Pensacola Beach—a buyer should determine:

Who owns the underlying land?
When did the individual property lease begin?
When does it currently expire?
What renewal or extension language is contained in this particular lease?
Has the lease been assigned, amended, renewed, or extended?
What annual lease payments apply?
Can those payments change?
Is the property subject to ad valorem taxation?
Can the lease be transferred to another buyer?
Will the remaining term satisfy the buyer’s intended mortgage program?
Could the lease term make the property harder to refinance or sell later?
What happens to the improvements when the lease ultimately expires?

For buyers, sellers, real estate agents, and mortgage professionals, one of the most important questions is not simply, “Can this property be financed today?” It is also, “How financeable is this property likely to be when the owner wants to sell it?”

Frequently Asked Questions About Navarre Beach and Pensacola Beach Land Leases

Who owns the land on Pensacola Beach?

The underlying Santa Rosa Island land was conveyed by the United States to Escambia County subject to restrictions. Pensacola Beach developed through individual leasehold interests administered through Escambia County and the Santa Rosa Island Authority.

Who owns the land on Navarre Beach?

Escambia County leased the Navarre Beach portion of Santa Rosa Island to Santa Rosa County in 1956. Santa Rosa County then issued individual leases and subleases for specific properties.

Are Navarre Beach and Pensacola Beach properties fee simple?

Many properties in these beach communities are leasehold rather than traditional fee simple. Buyers should verify the property rights and recorded lease documents for the specific parcel rather than assume the ownership structure.

How long are the land leases?

The Navarre Beach prime lease began with a 99-year term and automatic renewal provisions for additional 99-year periods. Individual property leases, however, can have different commencement dates, expiration dates, amendments, and renewal language.

Can you get a 30-year conventional mortgage on a leasehold property?

Yes, in many cases—but the lease has to satisfy the applicable investor and lender requirements. Under Fannie Mae’s current standard, the unexpired lease term generally must extend at least five years beyond the mortgage maturity date.

Does a perpetual renewal clause automatically solve the mortgage issue?

Not necessarily. A lender may need acceptable documentation showing that the leasehold estate securing the specific mortgage satisfies the investor’s legal and term requirements. A general or master renewal concept may not be enough by itself for every property.

Can a shorter mortgage term help?

Potentially. Because the lease-term test is tied to the maturity date of the mortgage, a shorter loan term can reduce the number of years that must remain on the lease. The property and lease still must meet all other lender and investor requirements.

Do leasehold owners pay property taxes?

Leasehold ownership does not automatically eliminate ad valorem taxes. Taxes and contractual lease payments are separate issues and should be verified for the specific property.

How much is the land-lease fee?

The answer depends on the property and its lease history. In Navarre Beach, certain leaseholders completed 2016 amendments establishing or capping annual lease fees at $250, but buyers should review the actual documents and current billing for the property they are considering.

Does a land lease affect property value?

It can. Appraisers and buyers may consider the remaining lease term, lease payments, restrictions, financing availability, and market acceptance. A shorter remaining lease term can become especially important when it reduces the number of buyers who can obtain financing.

What happens when the lease expires?

The answer depends on the actual lease and any enforceable renewal or extension provisions. Buyers should not rely solely on verbal descriptions such as “99-year lease” or “perpetual.” The recorded documents control.

The Bottom Line

Leasehold property is not inherently good or bad. It is simply a different form of real estate ownership that requires buyers to understand an additional set of documents and risks.

Navarre Beach & Pensacola Beach land leases are excellent examples of why the words “99-year lease” do not tell a buyer nearly enough. The actual recorded lease for the individual property—not simply the general history of Santa Rosa Island—needs to be reviewed when evaluating financing, costs, resale, and long-term marketability.

A leasehold property may be perfectly financeable today but become increasingly difficult to finance as its stated expiration date approaches. Understanding that issue before purchasing can help buyers make a more informed decision and help current owners better anticipate future refinancing and resale challenges.

About the Author

Cinnamon Tyler (NMLS#69310) is a mortgage and real estate professional serving Northwest Florida. She has worked in mortgage lending since 1998 and helps buyers understand financing issues that can affect unique properties, including leasehold real estate. This article is intended for general educational purposes and is not legal or tax advice. Buyers should review the specific lease and consult appropriate legal, tax, title, and lending professionals before purchasing a leasehold property.

Sources & Further Reading

Fannie Mae Selling Guide – B2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold Estates. Special Property Eligibility and Underwriting Considerations: Leasehold Estates | Fannie Mae

Fannie Mae Selling Guide – B4-1.4-05, Leasehold Interests Appraisal Requirements. Leasehold Interests Appraisal Requirements | Fannie Mae

For Pensacola Beach and Navarre Beach properties, buyers should also review the recorded lease, assignments, amendments, county records, title work, and current lender requirements for the specific property.

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