In 1951 and 1957, Stanford University ground leased a portion of the land it owns in Menlo Park to developers for the purpose of creating two single-family residential subdivisions, Stanford Creek and Stanford Hills.
Stanford Creek Lease was executed March 3, 1952, with a Lease commencement date of March 1, 1952 and an original expiration date of February 28, 2051.
Stanford Hills Lease was executed April 27, 1959, with a Lease commencement date of April 30, 1959 and an original expiration date of April 29, 2058.
After completing each subdivision, the developers assigned their respective ground lease (the "Lease") to those individuals ("Lessees") who purchased the individual sub-divided parcel leaseholds. The Lessees thereby assumed the developers' obligations to Stanford under the ground lease.
Upon lease expiration, the property associated with the leasehold reverts to Stanford University.
In 2013, all of the then-current Lessees of both subdivisions elected to sign an offer by Stanford of a lease amendment (the "2013 Amendment"). All references to the "Lease" in this website shall mean the original leases, the terms of which remain in effect and are controlling, as amended by the 2013 Amendment. All capitalized terms shall have the meanings set forth in the Lease. The 2013 Amendment added the following elements to the Lease:
Ability to extend Lease:
Stanford Creek Lessees can request multiple lease extensions at any time up to the Extension Right Expiration Date of February 28, 2051, for any number of months or years, as long as the extension does not exceed a 51-year maximum term.
Stanford Hills Lessees can request multiple lease extension at any time up to the Extension Right Expiration Date of April 29, 2058, for any number of months or years, as long as the extension does not exceed a 51-year maximum term.
The expiration dates for individual leaseholds will vary if Lessees elect not to extend their lease term to the maximum possible lease expiration date allowed by the Lease.
Maximum possible lease expiration date:
Stanford Creek Lessees, by exercising a series of extensions or a single 51-year extension at the end of the Extension Right Expiration Date of February 28, 2051, can achieve a maximum lease expiration date of February 28, 2102.
Stanford Hills Lessees, by exercising a series of extensions or a single 51-year extension at the end of the Extension Right Expiration Date of April 29, 2058, can achieve a maximum lease expiration date of April 30, 2109.
Ten free lease years:
Stanford Creek Lessees received ten free years that extended their Lease term to February 28, 2061.
Stanford Hills Lessees, because of the 51-year maximum lease term requirement, received five free years that extended their Lease term to April 30, 2063, at which time they will automatically receive a second five-year extension that will ultimately expire on April 30, 2068.
Fee for lease extensions:
Lessees who choose to extend the term of the Lease will pay an Extension Fee proportional to the timing and duration of the requested extension as well as the value of the parcel at the time the extension is requested. The Extension Fee can be funded as part of a sale of the leasehold.
Stanford's Right-of-First Offer ("ROFO"):
When a Lessee decides to sell their leasehold, Stanford has the right, but not the obligation, to purchase the leasehold at the Lessee's offer price, before the Lessee offers it to any other party. If Stanford elects to purchase the leasehold, the sale will close after all contingencies are removed. If Stanford elects not to purchase the leasehold the Lessee may sell it to a third party, subject to the requirements of the Lease. The Lease is assignable to future lessees upon sale of the leasehold.
|Stanford Creek||Stanford Hills|
|Lease Commencement Date||March 1, 1952||April 30, 1959|
|Original Lease Expiration Date||February 28, 2051||April 29, 2058|
|Extension Right Expiration Date||February 28, 2051||April 29, 2058|
|Expiration Date upon signing
2013 Amendment (10 free lease years)
|February 28, 2061|| April 30, 2063*
April 30, 2068
|Maximum Possible Lease Expiration Date||February 28, 2102||April 30, 2109|