Thursday, May 29, 2008
In Saipan, property may only be "purchased" by non-indigenous people by a 55 year lease interest. Therefore, many real estate transactions are not transfers of fee simple estates, but rather leasehold estates. I was recently reviewing one of these leases and came across some common mistakes which I thought I'd just remind everyone to watch out for. First of all, make sure you don't lease for one minute over 55 years. The lease I saw was for a term from April 5, 2008 to April 5, 2063. The CNMI Constitution, Article XII, requires that a non-NMI descent person cannot acquire more than a 55 year interest. As a result, the lease must be drawn up, for example, beginning at 12:01 a.m. on April 5, 2008 and ending at 11:59 p.m. on April 4, 2063. It may seem like a ridiculous technicality, but it's the kind of thing someone will go looking for if they are seeking to void your lease--and the Constitution says that any transaction in violation of Article XII is "void ab initio," so it's better not to take any risks. In addition, the lease I looked at had an insufficient spousal consent. Here in the CNMI, where spouses have certain rights to share certain land, it is important to make sure that if you lease from one spouse, you have the other spouse "sign off" on that lease, and that the spouse's signature is appropriately notarized. I will go over some more lease options which, while not absolutely necessary, can be beneficial for landowners as well as tenants in future posts.