When the lease term ends, what principle is applied concerning the land?

When the lease term ends, the principle that applies concerning the land is reversion. This principle refers to the situation where ownership of the property reverts back to the landlord or lessor after the lease period concludes. In leasing agreements, the tenant has the right to use the property for a specified time, but ownership remains with the landlord. Therefore, at the end of the lease term, the property, including any improvements made by the tenant, typically returns to the landlord, demonstrating the concept of reversion.

In contrast, amortization deals with the gradual reduction of a debt over time through scheduled payments, which does not directly pertain to land or lease agreements. Depreciation refers to the reduction in value of an asset over time, often due to wear and tear, but it is not the principal that governs property at the end of a lease. Obsolescence involves the decline in usefulness or desirability of a property due to external factors, which also does not directly address the return of leased property. Therefore, the reversion principle is the most relevant concept when a lease term concludes.