Status: draft

Draft — not accepted. This proposal is still being iterated on and may change or be rejected. Do not implement against it.

RFC 0067: Tenure and ground-lease contract

Draft proposal. Drafted with AI assistance; reviewed by maintainers. An adopter's leasehold-acquisition plan is requirements evidence, not UWMD authority. No accepted decision selects any of the semantics proposed here. The owner has not accepted the RFC, and implementation is not authorized. Open decisions are listed in Decision status.

This is a design record. It is internally consistent, but deliberately not implementation-ready: several choices must be made before acceptance, and this text does not pretend they are made.

Summary

UW Markdown cannot say whether a deal's subject is a fee-simple or a leasehold interest. It also has no typed ground lease and no named ground-rent line. This draft proposes the narrowest first contract the evidence supports:

• Tenure: an OPTIONAL interest_type of fee_simple or leasehold. When it is absent, tenure is unstated, never assumed.
• Ground lease: an OPTIONAL typed contract holding only stated legal and economic lease facts, namely parties, term, extension options, the rent schedule with each step's reset kind, subordination of the fee, and the reversion terms.
• Ground rent: an OPTIONAL named §4.5 line, noi_model.expenses.ground_rent. Like every §4.5 expense line, it is a component of total_operating_expenses.

Nothing is projected, exercised or valued. No capital-stack tranche is added; RFC 0060's decision stands. No cross-check is proposed as normative.

Demonstrated gap

Re-verified on main at 3e61ada (2026-10-01). References name files, symbols and spec sections.

What UWMD lacks today. No file under spec/, and no source file in packages/*/src, mentions interest_type, ground_lease, ground_rent, leasehold, leased fee, fee simple or tenure.

• §4.2 ownership carries transaction type, current owner, acquisition date and price, existing debt, borrowing entity and ownership notes. It has no property-interest fact and no lease.
• §4.4 operating_statement.expenses has no ground_rent key. A historical payment can only sit in other_expenses.
• §4.5 noi_model.expenses is a fixed named list: taxes, insurance, management, payroll, utilities, repairs, contract services, marketing, administrative, professional fees and replacement reserves. It has no ground_rent line and no generic bucket.
• No section types a ground lease. Term, rent resets, extension options, the fee/leasehold relationship and subordination have no representation.
• Nothing distinguishes leasehold underwriting from a tranche.TrancheClass (capital-stack.ts) is senior_debt | mezzanine_debt | preferred_equity | common_equity | bridge | seller_financing | other_debt. RFC 0060 (decided, accepted 2026-09-19) refused a ground_lease class as the "wrong conceptual layer": a ground lease is "tenure and encumbrance, not capital". It preserved the need as "a demand-gated property/tenure or ground-lease contract against its own section, with its own RFC and a demonstrated consumer". ROADMAP.md records the same.

What the format does today. RFC 0060 notes that ground-rent dollars "may be reflected in NOI, at the author's discretion and without a named line". A reader cannot tell whether a document's NOI is before or after ground rent.

Adopter evidence. This is an adopter's evidence, not verified in this repository. Its planning, dated 2026-09-29, prioritizes underwriting a leasehold acquisition (improvements on leased land, ground rent an obligation), with ground rent stated before NOI as a named line. It reports that it currently signs a leasehold deal's ground rent only as dollars inside NOI and total operating expenses, with no tenure stated. It also applies a leasehold exit-value adjustment. Adopter demand shows a consumer exists; it does not set UWMD's contract.

Proposed first contract

Everything in this section is a proposal. RFC 2119 terms describe what the proposal would require if accepted. All additions are OPTIONAL; rates are fractions; dates are YYYY-MM-DD.

1. Tenure: interest_type

"interest_type": "fee_simple | leasehold"

• fee_simple — the author states that the subject is a fee-simple interest: land and improvements, not a lessee's estate.
• leasehold — the author states that the subject is a lessee's estate: improvements on land held under a ground lease, whose rent the subject's owner pays.
• Absent — tenure is unstated. A document that predates this field has not established fee-simple ownership by omitting it. No reader, validator, pack or cross-check may treat absence as fee_simple, or as any other positive statement about the legal interest. A renderer that shows tenure shows "not stated".

leased_fee (the lessor's estate) is deferred. No consumer underwrites it, and no repository evidence defines its semantics.

2. Ground-lease contract: stated lease facts only

"ground_lease": {
  "lessor": "string | null",
  "lessee": "string | null",
  "commencement_date": "YYYY-MM-DD | null",
  "expiration_date": "YYYY-MM-DD | null",
  "extension_options": [
    {
      "count": 0,
      "term_years": 0,
      "notice_months": null,
      "rent_reset": "fair_market | fixed | cpi | null"
    }
  ],
  "rent_schedule": [
    {
      "effective_date": "YYYY-MM-DD",
      "lease_year": null,
      "reset_kind": "initial | fixed | cpi | fair_market",
      "ground_rent_annual": null,
      "cpi": { "index": null, "floor": null, "cap": null },
      "terms": null
    }
  ],
  "fee_subordinated": null,
  "reversion": {
    "improvements_revert_to_lessor": null,
    "surrender_condition": "as_is | demolished | null"
  }
}

• Rent schedule. Each step states the resulting annual ground rent from its effective_date, not the increment. This is RFC 0055's escalation_schedule rule (LSE-01), so a reader never compounds resets.
  • reset_kind says how the step's rent is set, reusing RFC 0055's rent_reset words (fixed, cpi, fair_market) plus initial.
  • ground_rent_annual is stated where the contract fixes it: the initial step, a fixed step, or a reset that has already occurred.
  • For a future cpi or fair_market reset whose result the contract does not determine, it is null, and no tool fills it. An author's assumed future reset value is an underwriting projection, not a lease fact, and has no home in this contract.
  • cpi carries the stated index label and optional floor/cap, as fractions on the change since the prior step.
• Extension options reuse RFC 0055's renewal_options shape exactly. Whether the underwriting assumes an option is exercised is an underwriting assumption, not a lease term. The earlier draft's underwritten_as_exercised is therefore removed (see Deferred).
• fee_subordinated — true when the fee is subordinated to the leasehold mortgage, false when it is not, null when unknown.
• Reversion states the legal terms at expiry: whether improvements revert to the lessor, and the surrender condition. It carries no exit adjustment. The earlier draft's exit_haircut is a valuation assumption and is removed (see Deferred).
• No remaining term field. The earlier draft's remaining_term_years had no stated reference date. Remaining term is read from expiration_date against a date the reader chooses; the format states no derived figure.

Nothing here is calculated. Core would not:

• forecast CPI, appraise a fair-market reset, or fill a null future rent;
• exercise or assume an extension option;
• infer renewal;
• compute remaining term or reversion economics;
• generate per-period ground-rent rows.

This is the posture of RFC 0055 ("Nothing here is exercised") and RFC 0053 ("The schedule documents and verifies the stated tax line; it does not project it").

3. Where the contract lives (proposal; final home open)

Option	Shape	For	Against
A. Split (preferred)	interest_type in §4.2 ownership; the ground_lease contract in its own new standard section, numbered at acceptance	§4.2's purpose is "current ownership, acquisition terms, entity structure", so the estate acquired is an ownership fact. RFC 0060 places the contract "against its own section". A multi-decade contract with a schedule and options is the kind of object §4.24–§4.27 gave their own sections. RFC 0064's carrier decision shows a standard section can be created directly by RFC.	One more section ID. Readers join two places.
B. All in §4.2	ownership.interest_type and ownership.ground_lease	One place; it is the earlier draft's choice.	It departs from RFC 0060's "its own section" and puts a long contract inside an acquisition-terms section.
C. Nested under the expense line	The contract under noi_model.expenses.ground_rent, as RFC 0053 nests reassessment/abatement under real_estate_taxes	The schedule sits beside the line it would verify.	Term, options, reversion and subordination are not attributes of an expense line.
D. A tenure section	Both facts in a new section	One tenure home.	It moves an ownership fact out of §4.2 for no demonstrated gain.

The draft prefers A. The choice is open before acceptance.

4. Ground rent in the underwritten NOI

"ground_rent": { "value": 0.0, "source": "schedule | actual | estimate" }

noi_model.expenses.ground_rent is a named §4.5 line. Like every §4.5 expense line, it is a component of total_operating_expenses, so a document that states it has NOI after ground rent.

The repository evidence for this representation:

• RFC 0060's matrix gives the ground-lease treatment as "Keep the payment upstream of NOI", and lists "ground rent as a named line" as material information lost today.
• §4.5 expense lines compose total_operating_expenses. uwmd-excel emits Total Operating Expenses as SUM over each class layout's expenseLines and NOI as EGI − Total OpEx (toWorkbook.ts). A §4.5 line that is not in the total would break that footing and Excel ↔ calc parity.
• The earlier draft's in_net_operating_income flag is removed. Its precedents, CAPX-07 in_noi_model (§4.8) and TAX-08 in_exit_noi (§4.9), are flags on amounts held outside the aggregate they may be reflected in. A flag on a §4.5 line saying the line is not in §4.5's own total contradicts the section's structure.

Double counting is prevented by existing boundaries, unchanged here:

• No tranche. A ground lease is tenure and encumbrance, not a capital-stack tranche (RFC 0060). TrancheClass is unchanged, and a ground lease stated as a tranche remains the double count RFC 0060 refused.
• Sizing reads NOI. The capital-stack sizing verbs read noi_model.net_operating_income (capital-stack.ts), and CC-05 compares the DSCR NOI with it. When the named line is stated, those verbs read NOI after ground rent, with unchanged formulas.
• No tool moves amounts. No tool may move an amount across NOI, or into or out of the named line. Restating ground rent as the named line is the author's act.

Open: an unstated position. For a leasehold whose noi_model has no named line, a reader still cannot tell whether NOI reflects ground rent folded into another line or excludes it. The options are below; this is an owner decision.

• N1. A leasehold document with a noi_model MUST state noi_model.expenses.ground_rent, using 0 when no rent is payable (for example, a prepaid lease).
• N2. A CAPX-07-shaped boolean on the tenure or ground-lease object states whether noi_model already reflects ground rent when no named line is stated.

The draft leans to N1, because it removes the ambiguity without a second place to state the same fact. Neither is accepted.

5. Candidate line-to-schedule check (not normative)

A check that the stated ground-rent line agrees with the contract schedule would catch drift between them. It is not proposed for emission: no code is reserved and nothing is implemented. Its contract is open:

• Reference. Possible references are:

  • an explicitly stated selector naming the schedule step the line equals, following TAX-07, which ties real_estate_taxes.value to a stated stabilized_period rather than inferring a year;
  • ownership.acquisition_date (the earlier draft's choice);
  • a stated underwriting-period start.

  The draft leans to the explicit selector, because it infers nothing.

• Comparison. Exact at the §VIII.9.4 currency quantum, as TAX-03 foots, or CC-05's 1%.

• Family. An in-family rule, as TAX-07 is, or a registered CC-NN check. CC-NN is a closed sequence extended by RFC (Protocol §III.6a), and CC-16 is the last registered.

• Steps with null rent. A step with a null future rent cannot be compared, so the check would skip it.

6. Validation (proposal)

A new GL-NN family (Protocol §III.6a), owned by validate. Every code would be an error, as LSE-NN and TAX-NN are. Each refuses a stated value that breaks its typed contract; absence of any field emits nothing.

Code	Condition
GL-01	A stated interest_type is not fee_simple or leasehold.
GL-02	A ground-lease contract is stated and interest_type is not leasehold, including when interest_type is absent. Tenure is never inferred from the contract's presence.
GL-03	A stated commencement_date or expiration_date is not a real date, or commencement is not before expiration.
GL-04	Rent-schedule steps lack a real effective_date or are not strictly increasing. A stated ground_rent_annual is not finite and nonnegative. An initial or fixed step omits it. A step lies outside [commencement_date, expiration_date + total stated option term] when those are stated.
GL-05	reset_kind or rent_reset is outside its vocabulary; cpi fields appear on a non-cpi step; or floor > cap.
GL-06	An option's count or term_years is not a positive integer, or notice_months is not a nonnegative integer.
GL-07	fee_subordinated or improvements_revert_to_lessor is not a boolean or null, or surrender_condition is outside its vocabulary.
GL-08	A stated noi_model.expenses.ground_rent.value is not finite and nonnegative, or source is outside its vocabulary.

The N1/N2 decision above would add one rule. The candidate check in §5 adds none.

Deferred and out of scope

Each of these needs its own contract and evidence:

• leased_fee tenure and leased-fee underwriting: no consumer.
• A leasehold exit-value adjustment. An adopter applies one, but it is a valuation assumption. Its home (§4.9 exit_analysis, §4.6 valuation, or elsewhere) and its rules are unsettled, so this draft names no field. A later contract must keep it outside the lease facts and must not derive it from the remaining term.
• Underwriting assumptions about the lease: whether an extension option is assumed exercised, and any assumed future reset value.
• Percentage-rent participation. It is a lease term, but RFC 0060's list of lost information does not include it, computing it needs a defined base, and its only evidence is adopter planning. It is deferred to keep the first contract narrow.
• A historical §4.4 operating_statement.expenses.ground_rent line.
• Fee-sale / closing bifurcation (a fee sale stated as a source).
• Financing treatment of leasehold mortgages beyond existing tranches.
• Lender ground-lease reserves.
• Projected CPI or fair-market resets, and any per-period ground-rent series. No deterministic projection contract exists, and RFC 0054 deferred per-period lease series until a consumer needs them.
• Mixed-use components. Ground rent for a component of a mixed_use deal is out of scope; that layout emits no §4.5 expense lines.

Compatibility analysis

• Existing .uw.md files — none change meaning or validity. Every field is optional. An existing document's tenure stays unstated; this draft assigns it no meaning, not fee_simple. No existing rule changes.
• Tier-1 Reader — the parser already carries undeclared content keys. Renderers MAY show tenure, and show "not stated" when it is absent.
• Tier-2 Editor — new editable fields; no edit-semantics change.
• Tier-3 Calc Host — no formula change. Packs read noi_model.net_operating_income as stated.
• Tier-4 Agent Host — none.
• Modules — no manifest change.
• Capital stack — TrancheClass and the sizing verbs are unchanged.
• Excel — every single-class layout emits Total OpEx as SUM over its expenseLines (multifamily, office, retail, industrial, self-storage, hospitality, senior housing, student housing, land). A stated ground_rent line must be added to each, in the same change as the format line, or the workbook's NOI stops footing to the stated NOI. The mixed-use layout emits no §4.5 expense lines.

No deprecation path is needed.

Conformance impact

This PR changes no fixture. If accepted, a feature directory such as conformance/tenure/ (in the conformance/lease/ layout) would pin:

• Accept cases:
  • a leasehold with initial, fixed, past cpi and future fair_market steps, the future step null;
  • options stated, but none exercised by the format;
  • the named line inside total_operating_expenses;
  • an existing document with no tenure, whose validation is byte-identical and whose tenure is "not stated".
• Reject cases, one per GL-NN code, including:
  • a contract with interest_type absent (GL-02);
  • a fixed step with no rent (GL-04);
  • floor > cap (GL-05).
• Parity: Excel for the named line in each single-class layout.

No case would exercise the candidate check until its contract is decided.

Reference implementation (if accepted)

This draft authorizes no implementation. If accepted, the implementation would touch:

• spec/UW_FORMAT_SPEC_v1.md (§4.2, the contract's section, the §4.5 line);
• spec/UW_PROTOCOL_v1.md (the §III.6a GL-NN row);
• a shape schema for the contract, like lease-escalation-schedule.schema.json;
• packages/uwmd-core/src/validator.ts and types.ts;
• the nine uwmd-excel single-class layouts;
• the fixtures above;
• the wiki.

The format-spec rule bullets and the validator rules would land together, as verify-codes requires. The RFC would not be implemented until it ships in a release with a CHANGELOG entry.

Alternatives considered

• Absent interest_type means fee_simple. This was the earlier draft's choice. A document that never stated tenure would be read as asserting a legal interest it never stated.
• Declare leased_fee now for completeness. Vocabulary with no consumer or semantics; deferred.
• A ground_lease tranche class. Refused by RFC 0060; nothing here reopens it.
• exit_haircut inside the lease's reversion. A valuation assumption is not a legal lease term; deferred to a separate contract.
• An in_net_operating_income flag on the §4.5 line. It contradicts §4.5's composition and Excel's footing; see §4.
• A normative CC-17 keyed to acquisition_date. Its reference date, tolerance and family were all undecided, so it cannot be normative; it is now a candidate (§5).
• Requiring a stated rent on every step. It forces producers to state projected CPI and fair-market results as contract facts.
• Stating the reset mechanics and letting core project the rent. It contradicts the format's state-and-verify posture and puts CPI paths and appraisals into the verifier.

Decision status

RFC 0067 remains draft.

Item	Source	State
A ground lease is not a capital-stack tranche; TrancheClass unchanged	RFC 0060 (decided, 2026-09-19)	Existing decision. Unchanged.
§4.5 lines compose total_operating_expenses; sizing verbs read noi_model.net_operating_income; Excel ↔ calc parity is exact	Format §4.5, §4.24; Protocol §VIII.5; uwmd-excel	Existing. Unchanged.
Stated schedules are verified, never projected; options are never exercised	RFC 0053, RFC 0055	Existing posture, adopted here.
Leasehold acquisition is the demonstrated consumer	Adopter planning, 2026-09-29	Adopter evidence. Not verified in this repository. Not authority.
interest_type (fee_simple, leasehold); absence is unstated	This draft	Proposal.
Ground-lease contract fields (stated lease facts only)	This draft	Proposal.
Named §4.5 ground_rent line inside total_operating_expenses	This draft, following RFC 0060 and §4.5 structure	Proposal.
GL-NN family, every code an error	This draft	Proposal.
Home of the contract (A preferred; B, C, D)	—	Accepted decision required.
Leasehold without a named line: N1 (MUST state the line) or N2 (disclosure flag)	—	Accepted decision required.
Candidate line-to-schedule check: whether to have one, and its reference, tolerance and family	—	Accepted decision required. Not emitted.
Whether leasehold requires a contract object, and which contract fields are required	—	Accepted decision required. The draft requires neither.
Percentage rent in the first scope	—	Accepted decision required. The draft defers it.
leased_fee, exit adjustment, option and reset assumptions, §4.4 line, bifurcation, financing, lender reserves, projected resets	—	Deferred to separate contracts.
Acceptance of RFC 0067 and implementation	—	Not decided. Not authorized.

Prior art

• RFC 0060 — the decision this RFC answers; its tenure row is the demand this draft addresses.
• RFC 0055 — the step shape (resulting rent, not increment) and the renewal_options / rent_reset vocabulary.
• RFC 0053 — a stated schedule that is verified, never projected; TAX-07's explicit period tie and TAX-08's position flag.
• RFC 0057 — CAPX-07's in_noi_model disclosure for an amount held outside noi_model.
• RFC 0064 — a standard section created directly by RFC.
• Appraisal practice for leasehold interests deducts ground rent before NOI. No specific source is cited.