MADISON, MS (WLOX) - Some Madison homeowners say the Secretary of State is killing their property values. It comes from his interpretation of 16th section land leases and how much the land is really worth.
"I'm now being told that the person who takes over our lease is going to have to pay this astronomical fee," said Madison homeowner Ron Smith.
For Smith and hundreds of other homeowners living on 16th section land, selling their homes may be impossible.
"You're going to be told this one's going to cost you an additional $2500 to $3000 a year. Which one would you buy?" Smith asked.
Secretary of State Delbert Hosemann said it's a leaseholder agreement they signed when they built on the property.
"That was their contract. That's what they agreed to with the school board. I don't think we should change it or go back," Hosemann said.
The problem is as the 40 year lease shortens over time, the odds of reselling your home become greater. Fannie Mae requires the lease to be five years longer than your mortgage; for Freddie Mac, it's ten years.
Smith said to sell means losing money. One nearby home has been on the market for two years.
"The only way to sell our homes is to reduce the cost of the home itself. We can't do anything about the land as we depress prices here. That's going to depress prices in surrounding areas," Smith said.
Hosemann said the law is on his side.
"I don't find them at fault here, but I do know we've got a statute here, and it's interpreted by the Attorney General's Office. And I'm required to enforce the law, not make it," Hosemann said.
The lease increase only takes effect when homeowners sell their homes. If they refinance, Hosemann said they can get a lease extension. If they live in the home the whole 40 years, the lease doesn't increase either.