Ashley Browning, Sixteenth Section Specialist, email@example.com
601-499-0800 or 601-499-0734
Sales/Purchases of Homes, etc. on Sixteenth Section Lands
As soon as a contract for sale is executed regarding any residence on Sixteenth Section Lands, the Sixteenth Section Lands Department needs to be notified in order to prepare a closing document(s). You can email the Sixteenth Section Lands Department at the Contact Information listed above with the following information: property location, name of sellers, full names of purchasers as they are taking title (needs to agree with their loan documents) and the name and telephone number of the closing attorney. This department will prepare the Assignment of Lease and if necessary, a Notice to Renew that allows a lessee to exercise their option to renew the lease for an additional 25 years that extends the lease term for financing purposes. These documents cost $200.00 each and those fees are collected by the attorney at closing. Assignments of Lease must be approved by the Board of Education while Notices to Renew must be approved by both the Board of Education and the Board of Supervisors.
The Notice to Renew form has been developed by the Federal National Mortgage Association and the Secretary of State’s Office that allows leaseholders in residential subdivisions in Madison County that are currently paying annual lease fees to the School District, the opportunity to exercise their “option to renew” as specified in their original 16th Section Long Term Residential Lease. This document will effectively extend the expiration date of the lease from the initial 40-year, or primary term, to the end of the additional 25-year renewal term for financing purposes and assist current leaseholders who are refinancing or selling their homes. Please note that lease fees remain locked in for the primary term only, and a new lease based on a current appraisal will have to be performed in order to establish rentals at the end of the initial 40-year or primary term. There is a $200.00 fee, payable to Madison County Schools, associated with the preparation of the Notice to Renew, and the recording fee to the Chancery Clerk.
Always remember that anytime there is a change recorded in land records regarding your property, you must again sign up for homestead exemption. Therefore, if you are refinancing and a Notice to Renew is recorded in land records, you need to remind yourself to go to the Tax Assessor's office the following January or February to fill out new homestead exemption forms.
Recording fees to record leases, assignments, amendments, etc., are paid separately to the Chancery Clerk and are not included in the fees paid to the School District.
When speaking to your mortgage company regarding your Sixteenth Section annual lease payment, please refer to it as a "ground rent." Mortgage companies outside the State of Mississippi may not be familiar with Sixteenth Section Lands, but they are familiar with the term "ground rentals." Sixteenth Section Land annual lease payments are paid in advance annually to Madison County Schools and are due on the anniversary date of when the "source lease" begins, so they can be due any day of the year. This payment is paid not part of your ad valorem taxes (city, county, school district taxes and/or any other assessments), which are paid to the Tax Collector of Madison.
Websites Available to Locate Leases, Assignments, etc.
The following two web sites will assist you in locating 16th section documents for the Madison County School District. All documents are scanned and listed in land records at the Chancery Clerk’s office. You can also access aerial tax maps through the Tax Assessor’s link. 16th section leases and assignments are also scanned and available for view at the Secretary of State’s web site. Bid packets for all counties advertising agricultural and hunting and fishing leases are listed at the Secretary of State’s web site.
The laws governing Sixteenth Section lands are set forth in Miss. Code Ann. § 29-3-1 through § 29-3-183 (1972, as amended).
Hunting and Fishing Leases
To find out what lands will be available for a hunting and fishing lease, you can perform a search on the Secretary of State’s website by following these directions: Go to www.sos.ms.gov, click on “public lands” to the left, then click on “16th Section Lands” on the left; now look to the right of the page and select “Leases” under 16th Section Lands. On the right, you will see several selections. The “bid notices” will show all hunting and fishing leases and agricultural leases, etc., currently being advertised (hunting and fishing, as well as agricultural leases, are advertised for two successive weeks, the first being at least ten days before the bid opening).
If you select “Search Leases” on the right of the page, a menu will open where you can put in the name of the county (there is usually more than one school district within a county), then select “hunting and fishing” under Subclass, and then select “Expiring Within” and put in 1 year. All hunting and fishing leases that are expiring within a year will be viewable and will reflect the location, name of the lessee, the school district, acreage and what is currently being paid per year.
As long as a current lessee submits a bid for a hunting and fishing lease, they are given the opportunity to match the high bid and be awarded a new lease for another five years. In the case of agricultural leases, as long as the current lessee submits a bid, they are given the opportunity to pay five percent above the high bid and be awarded a new lease for another five years.
NOTE: Hunting and fishing leases are typically advertised in the early spring and summer regardless of when they expire so lessees will have time to put in food plots, etc., for the fall. Madison County Schools also requires a contractual deposit of an estimated two year’s ad valorem taxes to be held in escrow to pay any pro-rated taxes after the lease has expired and a new lessee takes possession, or to be used to pay any default in the lease fee.
Appraisals To Establish Annual Lease Fees/Rentals
Appraisals are performed to establish the annual lease/ground rental fees in accordance with Statutory requirements. An Attorney General’s Opinion dated June 9, 2015 to Lee & Lee, P.A. reiterates that primary authority over leasing and management of Sixteenth Section Lands is vested in the local boards and officials. Miss. Code Ann. Section 29-3-1 placed the “duty…to manage” sixteenth section land with the “school board.” Approval of the rental value is by this same statute vested in the “board of supervisors” with express provisions to be followed in the event the board of supervisors “declines to approve the rental value.” The local boards of education manage Sixteenth Section Lands as Trustee under the general supervision of the Secretary of State.
Madison County School District currently uses five percent of the value of the property (land only) to calculate the annual lease fee/ground rental for residential leases while it uses eight percent of the value of the property (land only) to calculate the annual rental/ground lease fee for commercial leases.