This month, Fairhope homeowners on Single Tax land have a bill from a landlord most visitors never hear about. The Fairhope Single Tax Corporation says its 2026 invoices have gone out. Leaseholders who pay in full by November 2, 2026 get a 2% discount on their rent. Anyone who skips the discount has until December 1, 2026 to pay in full.
The invoice applies only if the house sits on Single Tax land. That covers a lot of ground. The corporation says it still owns about 4,500 acres in and around Fairhope, about 25% of the city, with most of it downtown and running east near Fairhope Avenue. On those parcels, the person who buys the house owns the building. The land under it comes with a renewable 99-year lease.
Buying the house without the land doesn't mean the land costs nothing. In much of Fairhope, the price of a leasehold house still includes much of the land's value, and the yearly rent comes on top of it.
A rent built around taxes and a fee
The founders arrived from Des Moines, Iowa, in 1894, led by Ernest B. Gaston. They followed the economist Henry George, who argued that land value created by a community should go back to that community. In theory, the rent was supposed to capture that value. According to a 1987 Alabama Supreme Court decision, the standard lease set annual rent at the land's "annual rental value," not counting improvements. The corporation's executive council set it in a way meant to even out differences in location and natural advantages.
By the 2000s, the rent worked differently. A 2004 paper published by the Lincoln Institute of Land Policy described how the corporation billed at that time:
| Rent component, as described in 2004 | What it covered |
|---|---|
| Property taxes | Taxes on both the land and the building, based on the Baldwin County assessor's valuation |
| Demonstration Fee | 0.30% of the assessed land value, used for community projects |
| Administration Fee | $90 per lot |
These are 2004 figures. No current rent schedule has been published, so this year's rates aren't public. The structure still explains the mechanism. The author described the corporation as essentially "an unpaid tax collection agency" that also collects a small percentage of land value for public projects. The founders' 1913 constitution had already provided for paying members' state and county taxes out of the corporation's general fund.
The rent was tied to the county assessment rather than to market value, and that choice is what matters for buyers.
Why the land shows up in the price anyway
The same 2004 paper compared assessments with actual sales. In the Bluffs area, recent transfers of small 65-by-150-foot Single Tax lots pointed to values of $300,000 to $400,000. The county's average assessment for eleven similar lots was $127,000, or about a third of that. At Bayview Place, southeast of the central business district, Single Tax lots were selling for about $200,000 each but were assessed at an average of $52,000.
When rent is based on a value that low, part of the land's worth goes uncollected every year. That uncollected value doesn't disappear. The paper explains where it goes:
"As a natural consequence of not collecting the annual value of a given site, the site acquires a sellable price that represents the capitalized uncollected value of the site."
The corporation saw this coming and tried to stop it. For decades, a lease transfer went through a review in which buyer and seller both promised that no money changed hands for the land. The corporation valued the improvements and both parties agreed the sale included nothing more. The paper says that "in practice unrecorded payments were often made" anyway. It describes a 60-by-150-foot bayfront lot that transferred for $2,000 in the 1920s, even though the buyer expected to keep paying rent.
The courts drew the same line. In the 1987 decision, the Alabama Supreme Court held that the lease let a leaseholder sell the improvements and the value created by their own efforts. It did not let them charge for the corporation's land value, and the corporation couldn't dictate the sale price of the improvements. Shortly afterward, according to the Lincoln Institute paper, the review system ended. By the late 1980s, the corporation had "gave up any pretense of preventing leaseholders from selling the increase in value of the site." The paper also says an effort in the 1970s to raise rents to market levels over about seven years was dropped after protest and a long lawsuit, and that there had been "no serious consideration of collecting market rents since that time."
The cost of a Single Tax house in Fairhope comes in two parts.
- At closing, the price covers the house plus the part of the land's value that the rent doesn't collect.
- Every year after that, the rent covers the taxes the corporation pays plus its fees, all based on assessed rather than market value.
No dataset was found that compares leasehold sales with matching fee-simple homes, so there's no reliable rule like "leasehold sells for X% less." The research doesn't support a fixed discount based on tenure alone. Each property gets priced on its own merits, the same way you'd evaluate a fee-simple house down the street.
Where the corporation's money goes
The demonstration fee is the part of the rent set aside for public projects. In 2004, the paper listed the Performing Arts Hall and an addition to the local emergency room as recent projects.
The corporation's recent giving reaches past those projects, though no source says which fees paid for it. In April 2025, the Fairhope Volunteer Fire Department demolished its old training building, which dated to about 1992 and was no longer safe to use. WKRG reported in February 2026 that the replacement was a three-story, $750,000 facility with live burn rooms and a tower for rope and rappelling drills, "fully funded through a donation from the Fairhope Single Tax Corporation." Fire Chief Chris Ellis told the station, "This building will let us train for the future." By March 2026, WKRG reported that the building had hosted its first large regional training exercise.
Downtown, Gulf Coast Media reported in April 2025 that Mayor Sherry Sullivan said the corporation was working on renovating the former public library site on Magnolia Avenue.
The corporation is changing addresses too. It plans to move from 336 Fairhope Avenue to 10 N Summit Street, with the new mailing address taking effect January 1, 2027. Its announcement mentions that the new office has parking. If you're paying your 2026 rent by mail, keep using the Fairhope Avenue address through December 31, 2026.
How lenders and title work handle leasehold homes
Leasehold homes can be financed. The major federal guidelines all allow it, with conditions:
- FHA, under 24 CFR Part 203, can insure a mortgage on a leasehold that is either renewable for a term of at least 99 years or runs at least 10 years past the mortgage's maturity.
- Fannie Mae's Selling Guide, published October 7, 2026, allows leasehold mortgages in areas where leaseholds have market acceptance. The lease must be recorded and enforceable, title insurance is required, the term must run at least five years past the mortgage's maturity, and the leasehold must be assignable, transferable and mortgageable.
- Freddie Mac's guide also allows leasehold mortgages where the property type has demonstrated market acceptance, with its own requirements for title insurance, lease term and lease protections.
These rules apply to leaseholds in general. They don't mean a particular Fairhope lease or lender has been approved, and no recent reporting was found of FHA, VA or conventional loans being denied specifically because a home sat on Single Tax land. Local lenders often point out that two houses on the same Fairhope street can have different tenure. One can be leasehold while the house next door is fee simple, so a downtown address doesn't tell you which you're looking at. The title work settles it, and the earlier you ask, the more time your loan file has to adjust.
FAQ
How much of Fairhope is Single Tax land?
The corporation's website puts it at about 4,500 acres, roughly 25% of Fairhope, inside and outside the city limits. In a 2025 WKRG story, Fairhope Museum of History director Gabriel Gold-Vukson estimated about 4,000 acres.
Is the corporation part of city government?
No. It's a 501(c)(4) not-for-profit inside the city. The colony built Fairhope's early infrastructure and deeded it to the town when Fairhope incorporated in 1908. Fairhope and Arden, Delaware, are the only two single tax colonies left in the United States.
Does buying a leasehold home mean paying the county tax bill directly?
As the 2004 paper described it, the corporation collected enough rent from each leaseholder to pay the taxes on both the land and the building. The current billing details for any specific lease are best confirmed with the corporation and your closing attorney.
Does a sale restart the lease at 99 years?
No current public source explains this. The corporation's website confirms that the leases are renewable 99-year terms but doesn't describe how a lease is assigned or renewed when a home sells.
Leasehold questions come up early in a Fairhope purchase. We can help you confirm a parcel's tenure, read the lease terms alongside the purchase price, and line up your attorney and lender before you make an offer. Bo Nichols and the Nichols Real Estate team have worked Eastern Shore transactions for years. Book a consultation, or request a home valuation if you own a Single Tax home and want to see how buyers are likely to price it.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
