Frequently Asked Questions – DNRC Residential Lease Lots
Q. How can I go about obtaining a State residential lease?
There are two ways:
The most common way is that if a current lessee wishes to discontinue their interest in the lease property, they would market and sell their “improvements” (i.e., personal property and utilities) and assign the lease agreement to you, subject to approval by DNRC. The DNRC does not serve as a clearinghouse for improvements listed for sale.
Occasionally, new sites become available or an existing site is vacated. If such a situation exists, we will put the lease through a bidding process. If you win the bid, you become the lessee of the real property, under the terms and conditions of the State Trust leasing program. The DNRC handles this process through this website, the Helena office, and local Unit/Land Offices. Such listings are a fairly rare occurrence.
Q. Can I build on a leased lot?
Yes. Subject to the lease manager's pre-authorization and meeting all applicable local and state laws.
Q. What is the term of a state lease?
At the discretion of the Department, the term for a residential lease is variable from 10 to 25 years. The lease you requested assignment for will expire February 28, 20?? . All other terms and condition of the original lease remain in place. The Department may renew the lease upon notification to the lessee. At this time, the lease is not subject to competitive bid upon renewal.
Q. Can the lessee sublet the improvements on the state lease site?
Yes, the lessee shall have the right to sublease the land to another party upon the same terms and conditions as those upon which he leases it from the State, provided that no such sublease shall be legal until a copy thereof has been filed with the Department of Natural Resources and Conservation and approved by the Director. If a lessee subleases State land on terms less advantageous to the sublessee than the terms given by the State, the Director shall cancel the lease subject to the appeal procedure provided in Section 77-6-211, MCA. Furthermore, subleasing may cause loss of the preference right to renew this lease. (The Department's surface management rules concerning subleasing should be consulted.)
Q. Who is responsible for the maintenance of the road to the state lease lot?
The lessee is responsible for road maintenance to the state lease lot.
Q. How often will the annual lease payment be subject to change?
All state leases are reviewed for a lease fee adjustment every five (5) years, when the land is re-appraised and the lease fee adjusted to 5% of the land's new appraisal value. Past history has shown the annual lease fee can increase significantly if the real estate market increases over the five-year period before your lease review.
Q. How is the lease rate established and what is the lease billing process?
In December 2000, as a result of a Supreme Court ruling, the Board of Land Commissioners approved increasing the lease rate from 3.5% of the appraised value of the land to 5% . The higher-percentage lease rate is being phased in over a five-year period starting upon lease renewal/review between 2003 – 2008. Each lease receives a one-time rate phase-in process to move from 3.5% to 5%. All existing leases will have been phased in to the 5% rate by 2012.
A billing notice is sent to the lessee of record the first week in January. If the lease fee is not paid by March 1 st , a $25 late fee is assessed. If payment is not received by April 1 st , the lease is automatically canceled. Semiannual billing is sent out the first week in July and is due by September 1 st . If payment is not received by October 1 st the lease is canceled.
Q. How is this state land different from state land management by Department of Fish Wildlife and Parks?
The state land under the lease is State School Trust land managed by the Department of Natural Resources and Conservation. The state received this land from the federal government through the Enabling Act in the late 1800's. The Enabling Act and the Montana Constitution provide direction that the trust lands must be managed to provide income and that the trusts be compensated full market value for any use.
Q. What property taxes will be assessed?
The lessee is responsible for the assessment of personal property taxes on the improvements attached to the real estate. All personal property tax shall be current. Taxes on the improvements must be paid current prior to assignment. The value of the land is not taxed.
Q. What is needed to assign a lease when the lessee is deceased?
The person who was appointed as personal representative of the estate of the lessee must provide documentation of their appointment to act in the capacity of personal representative for the lessee and provide a copy of the lessee's death certificate. The personal representative must sign the assignment form as they are acting on behalf of the deceased lessee.
Q. Am I allowed to post my leased residential lot with signage?
No. It is state law that you may not post your property with any signage, including no trespassing signs.
