What You Actually Own on Pensacola Beach: The Leasehold Explained (2026)

The land belongs to Escambia County

Santa Rosa Island was conveyed to Escambia County by the United States in 1947, under the Act of July 30, 1946, and that conveyance carried restrictions on any further sale.¹ Nearly eighty years later the consequence still governs every transaction on the island: property on Pensacola Beach is a leasehold interest administered by the Santa Rosa Island Authority, not fee simple title.

Residential leases were written for terms of ninety-nine years. What you acquire when you buy is the unexpired remainder of one of those terms, together with whatever sits on the parcel. The Authority collects no tax revenue and is funded by the lease fees themselves.

And the house belongs to the County too

The house is not yours either. A Santa Rosa Island Authority residential lease recorded in November 2024 puts it this way:

“Title to any building or other improvements of a permanent character that shall be erected or placed upon the demised Premises by the lessee shall forthwith vest in said Escambia County, subject, however, to the term of years and option to renew granted to Lessee by the terms of this lease.”
Escambia County OR Book 9235, Page 1903, paragraph 4.²

The qualifier is what matters. Title vests in the County subject to the term of years and the option to renew. You hold the house through the lease. Your practical rights are real and marketable, and people buy, sell, mortgage and insure these properties every week. But the mechanism is not the one most buyers arrive expecting, and it is why the remaining term matters so much more here than a lease term usually would.

How the remaining term drives your financing

Lenders will not write a mortgage that outlives the lease securing it. For conventional conforming loans this is not a rule of thumb, it is published:

“The lease must have an unexpired term that exceeds the maturity date of the loan by five (5) years or more.”
Fannie Mae Single Family Selling Guide, B2-3-03, Leasehold Estates.³

Take your loan term, add five, and that is the minimum unexpired lease you need.

Minimum unexpired lease term by loan term, under Fannie Mae B2-3-03
If your loan term is	The lease must have at least
30 years	35 years unexpired
20 years	25 years unexpired
15 years	20 years unexpired
10 years	15 years unexpired

Run this on a lease written in the 1950s. A ninety-nine year term beginning in 1957 expires in 2056. Conventional thirty year financing on that parcel stops being available around 2021, thirty-five years before the lease ends. The property is still perfectly usable and still rents and still sells. It simply stops being financeable the ordinary way, and that is a resale constraint the next buyer inherits from you.

There is a lever here. Because the requirement keys off your loan term rather than a fixed number, shortening the amortization can bring a parcel back inside conforming guidelines. A lease with twenty-two years left will not support a thirty year note but clears the requirement for a fifteen year one. The payment is higher and it will not suit everyone, but price it before concluding a property cannot be financed.

B2-3-03 also binds conventional conforming lending only. Portfolio and non-conventional lenders set their own terms, and will sometimes write a loan where conforming guidelines will not. We recently closed a Gulf-front beach home with twenty-eight years left on the lease by placing it with a lender who understood the structure.

The lease clock can be extended

A short remaining term is often a fixable problem, and fixing it changes the arithmetic above completely.

Santa Rosa Island Authority residential leases of this era contain a renewal option, and leaseholders have exercised it. In November 2024 the Authority recorded renewals on two separate residential leases, one originating in 1951 and one in 1957. Both recite the same mechanism.

“Lessee, pursuant to paragraph fourteen (14) of the Original Lease and the First Amended and Restated Lease, has provided the Authority with written notice of their election to renew the term for an additional ninety-nine (99) year term, on the like covenants, provisions and conditions including an option for further renewals, upon the expiration of the Initial Lease Term.”
Escambia County OR Book 9235, Page 1902.² The parallel instrument at OR 9235/1897 recites the same paragraph fourteen on a lease dating from 1957.⁴

Three things follow from that clause.

The right is written into the lease

The lessee does not petition. The lessee gives written notice of election to renew under a clause that is already in the lease. That is a contractual right the Authority drafted. A Board vote still happens, and the Authority told us in writing it has never refused a first renewal on like terms. What the Board has declined, in January 2026, were requests from leaseholders who had already renewed once and wanted a further term on top of it, on counsel’s advice that a lease still inside its original ninety-nine years is not yet ripe for a further renewal. One of those was the 1957 lease cited below. The clause is the right; the timing of when you can use it again is where the Board has drawn a line.

Renewal adds ninety-nine years to the end, it does not restart from today

“Upon the expiration of the Initial Lease Term (the original term) on May 27, 2050, the lease will renew for an additional ninety-nine (99) year term beginning May 28, 2050, provided that the lease has not been sooner terminated in accordance with its terms.”
Escambia County OR Book 9235, Page 1905, paragraph 15.²

A lease running to 2050 becomes a lease running to 2149.

The renewed term carries the option again

“Upon renewal, the lease shall remain unmodified or amended, and shall renew on like covenants, provisions, and conditions as are in the lease, including an option for further renewals upon the expiration of the renewed lease term.”
Escambia County OR Book 9235, Page 1905, paragraph 16.²

What this means in practice. A parcel that fails the Fannie Mae test today may not be a parcel with a financing problem. It may be a parcel with an unexercised renewal option, which is worth finding out before you write an offer or accept one.

So: read the renewal clause in your own lease, and find it by its heading rather than its number. In the legacy instruments above the renewal right sits at paragraph fourteen, and the Authority’s own amendment form still recites “pursuant to paragraph fourteen (14) of the Lease” when it papers a renewal. But numbering moves. In the Authority’s current templates, published as exhibits to its Board Policy Manual, the clause is paragraph 19, headed RENEWALS, in both the standard residential lease and the amended and restated version.⁹ A 2024 restatement we have read carries the same provisions at paragraphs 15 and 16. Three different numbers, one clause. Match the heading to the document in your hand.

Two limits on all of this.

First, and this is not our inference, it is the Authority’s own statement: “Not every lease has the same renewal clause.”⁶ Four leases we have read closely, from 1951, 1957, 1969 and 1970, all carry the renewal right at paragraph fourteen, which points to a standard form, but a standard form is not a guarantee. Pull your own recorded lease, find paragraph fourteen, and read what is actually written there. If it is not what you expected, that is worth knowing years before you need it, not weeks.

Second, the option does not survive a default. The same lease provides that thirty days of unpaid rent, or an uncured breach after thirty days' written notice, lets the Authority terminate and take possession of the premises and the improvements, “as if the original term of the lease had expired without any option or right to renew the same” (OR 9235/1904, paragraph 10)². The renewal option is now plainly the most valuable thing in these documents, and a default destroys it.

What renewing actually takes

We asked the Authority directly. There is no application form and no hearing to attend. In writing, the Authority’s Assistant Manager of Administration and Leasing described the process this way:⁶

“To renew your like term lease, simply send a formal request to me via email stating your name, property address, and a statement requesting the Board renew the lease. We take care of the rest.”

“Yes, we only charge for the recording fees which is $35.50 per lease. We take care of drafting the amendments, presenting them to the Board and then taking them to be recorded after Board execution.”
Santa Rosa Island Authority, written response, August 26, 2026.⁶

The Authority drafts the amendment, carries it to the Committee and then to the Board, and records it once executed. The owner writes an email and pays the recording fee.

Timing is where this costs money. The Authority puts the round trip at roughly four to six weeks, through the Committee and then the Board. Four to six weeks is nothing until you have agreed a closing date, at which point that wait is the only thing standing between you and a renegotiation.

So do it before you go under contract, not after. A short remaining term is a financing problem the moment a lender looks at it. Fixed in advance it is a footnote and a $35.50 receipt. Discovered during a contract, with an appraisal ordered and a closing date in writing, it becomes a price conversation you did not plan to have. The work is identical either way. Only the leverage changes.

The clause carries its own deadline

Paragraph fourteen does not leave the timing open. It requires written notice of the election to renew not later than six months before the original term expires. That is generous when the expiry is decades out and unforgiving when it is not. Read the deadline in your own lease before you assume you have time.

Two houses on the same block, two different leases

We own the leases on two adjacent lots on Panferio Drive. Same block, same platted subdivision, executed a year apart. Paragraph fourteen is word for word identical in both, ninety-nine years, six months’ notice, the option carrying forward again. Almost nothing else about the money matches.⁸

One runs ninety-nine years from April 1969 and reserves a flat annual rental, stated as a dollar figure with no adjustment mechanism anywhere in the instrument. The other runs ninety-nine years from March 1970 and works completely differently: a nominal lease price plus an annual assessment that is expressly tied to the Consumer Price Index and adjusted every five years, in each calendar year divisible by five. That escalation runs on its own schedule and has nothing to do with renewing.

One distinction worth getting right. Renewing on like terms does not reset your lease fee. The Authority confirmed that, and paragraph fourteen backs it up: renewal is on “like covenants, provisions and conditions.” The Authority’s own policy treats a lease that is restated or renegotiated differently, and in that case the fee can be reset to the greater of the original fee carried forward by the cost-of-living index or the island average. Ask which kind of renewal you are being offered before you sign it. None of that is the same as saying your payment never changes: if your lease contains its own escalation clause, that clause keeps running whether you renew or not. Find out which of the two describes your lease.

Where fee simple conversion actually stands

You will find pages online describing an active conversion program with an application form and a filing fee. That is not Pensacola Beach, and it is the most misreported subject on the island.

December 2010 and 2011Escambia and Santa Rosa Counties adopt resolutions of intent, including Escambia Resolution R2011-77, describing how fee simple would be offered and stating that lease fees would be eliminated. Intent only. The restrictions are federal, so only Congress can lift them.
February 2014Enabling legislation passes the United States House of Representatives. It does not become law.
June 1, 2019Representative Matt Gaetz states at a Pensacola town hall that the fee simple bill is dead.
2025A further draft bill circulates. It has not been enacted.
TodayPensacola Beach remains leasehold. There is no conversion program available to leaseholders.⁵

Where the confusion comes from. Okaloosa County has offered leasehold conversion on Okaloosa Island and Holiday Isle, by quit claim of the county's reversionary interest, with a published application and a filing fee. That is a different island in a different county. Copies of that application circulate locally as a model of what Escambia could do, and they are regularly mistaken for evidence that Escambia is doing it. Escambia is not.

What you will actually be taxed on

You will get a property tax bill. What it covers, land or only the house, has been litigated for years and turns on your renewal clause.

Florida taxes whoever holds “virtually all the benefits and burdens of ownership” of real property, a test the courts call equitable ownership. On a leasehold that question splits in two, because the ground and the building can fall on opposite sides of it.

The house. In 1108 Ariola, LLC v. Jones, a Pensacola Beach case decided by the Florida Supreme Court in 2014, the Court held that island leaseholders are the equitable owners of the improvements and are taxed on them as real property. That holding did not depend on the lease being renewable, and it did not depend on any option to buy.¹⁰

The land. That moved later, and in the leaseholder’s favor. In Island Resorts Investments v. Jones (2016) and Beach Club Towers Homeowners Association v. Jones (2017), the First District Court of Appeal held that where a Pensacola Beach lease carries no right of perpetual renewal and no right to purchase for nominal consideration, the leaseholder is not the equitable owner of the underlying land. The improvements stayed taxable. The land did not.¹¹

Which brings it back to paragraph fourteen. Ariola had a companion case decided the same day, Accardo v. Brown, about Navarre Beach, where the leases were perpetually renewable. There the Court held the leaseholders were equitable owners of the land as well as the improvements. Ariola drew the line in a single sentence: the Accardo holding “turns on the fact that the leases are perpetually renewable.”¹²

The renewal clause in the older Authority leases runs ninety-nine years “including an option for further renewals.” Whether that language makes a particular lease perpetually renewable for tax purposes, and what would follow if it does, is a question about your specific recorded instrument. Nothing on this page answers it for you.

Two practical points. Pull your own lease and read the renewal language before you assume anything about either column of your tax bill. Then ask the Escambia County Property Appraiser how the parcel is assessed today, land and improvements shown separately, because that tells you which side of this the appraiser has currently put you on.

What this section is and is not. It maps what Florida courts have held about a class of leases. It is not tax or legal advice about your property, it does not create an attorney-client relationship, and the outcome turns on the specific wording of your instrument. If the answer moves your numbers, take the lease itself to a Florida tax lawyer or to the Property Appraiser.

Read the recorded chain before you buy

Leasehold title on this island has a longer and stranger paper trail than mainland fee simple, and the gaps are real. One example, entirely from the public record.

A residential lease was granted in May 1951. It was assigned in July 1952. Then in August 1952 the Authority and the new lessee signed a fresh lease that superseded and restated the original. That restated lease was not recorded until October 16, 2024, seventy-two years later.

The consequence is recited in the instrument that had to fix it: because of the delay in recording, the original lease “was mistakenly assigned to and assumed by Lessee” under an assignment dated January 23, 2024. A 2024 buyer took an assignment of the wrong lease. Unwinding it required a full Second Amended and Restated Lease, executed and recorded in November 2024.⁷

Nobody was careless here. The buyer, the closing agent and the Authority were all working from what the public record showed, and the public record was missing a document signed before any of them were involved. That is the risk on a barrier island whose leases predate modern recording practice, and the only defense is pulling the chain and reading it rather than trusting a summary.

Want to know what a specific parcel actually holds?

Send Jenny an address and she will tell you the original lease date, how many years remain, whether it has been renewed, and whether it is conventionally financeable as it stands.

Ask about a parcel

Common questions

Do you own the land when you buy on Pensacola Beach?

No. The island was conveyed to Escambia County in 1947 with restrictions on further sale, so what transfers is a leasehold interest administered by the Santa Rosa Island Authority. Residential terms were ninety-nine years, and the remaining term differs parcel by parcel.

Do you at least own the house on Pensacola Beach?

Not in fee. The lease provides that title to permanent improvements vests in Escambia County, subject to the term of years and the option to renew. You hold the house through the lease.

Can a Pensacola Beach lease be renewed for another 99 years?

The recorded instruments show that it can where the lease contains the option, and that leaseholders have done so. Both leases we examined place that right at paragraph fourteen and describe a renewal that adds ninety-nine years on expiry of the current term, on the same covenants, including a further renewal option. Whether your lease reads the same way is a question only your lease can answer.

How many years must remain on the lease to get a mortgage?

Loan term plus five, for conventional conforming lending, under Fannie Mae B2-3-03. Thirty year note, thirty-five years. Fifteen year note, twenty years. Below that you are into shorter amortization, portfolio lending or a non-conventional lender. Get your lender's answer in writing on the specific parcel before removing financing contingencies.

Does the leasehold make the property a bad buy?

Not a bad buy, but a different instrument, with a variable most mainland buyers never have to price. Properties on this island transact constantly and hold value. What gets people into trouble is not the leasehold, it is discovering the leasehold late, or never checking how many years are left, or assuming a renewal has happened when it has not.

Disclosure and limits. We own and operate two properties on Pensacola Beach, on Panferio Drive. That is a financial interest worth weighing as you read. Nothing here is legal, tax or investment advice, and none of it creates an attorney-client relationship. Every lease on this island can differ from its neighbor, and statutory and lender requirements change. The quotations above are accurate to the specific instruments and correspondence cited and are not representations about any other parcel. Read your own lease, and take advice on it.

Who is writing this

Rob Rushing grew up on Pensacola Beach, on Sabine Drive, and was in the first class at Pensacola Beach Elementary School in 1977, when it met in a borrowed A-frame house before the portables arrived. He is a licensed Florida real estate sales associate and a member of The Florida Bar (#140007), with an LL.M. in taxation and a practice background in tax, estate planning and real estate. With Jenny, he owns and operates two properties on the island.

Jenny Rushing is a licensed Florida REALTOR® (license SL3291677) and team leader of Rushing Partners at Berkshire Hathaway HomeServices PenFed Realty, at 836 Gulf Breeze Pkwy in Gulf Breeze. She has worked the Gulf Coast from Perdido Key to Destin since 2014 and holds membership in both the Pensacola Association of REALTORS MLS and the Emerald Coast MLS.

Ranked #37 of 2,086 agents in the Pensacola Association of REALTORS MLS by sales volume, year to date 2026. 271 closed transaction sides representing $114.2 million since 2014.

Production figures are Jenny’s own closed transaction sides from the Pensacola Association of REALTORS MLS Volume Ranking report. All inquiries go to Jenny.

Sources and notes

Act of July 30, 1946 (Public Law 564, ch. 699; 60 Stat. 712), which directed the Secretary of the Interior to convey the island to Escambia County to be used or leased “but never to be otherwise disposed of or conveyed by it,” and the deed from the United States to Escambia County, Florida, dated January 15, 1947, establishing the restrictions on conveyance of Santa Rosa Island. ↩
Escambia County Official Records, OR Book 9235, Page 1901, Instrument 2024088845, “Second Amended and Restated Single-Family Residential Lease”, Santa Rosa Island Authority and Gulf Destinations, LLC, effective November 20, 2024, recorded November 21, 2024. Original lease May 28, 1951, Historical Deed Book 335 Page 333. Quotations above are taken from pages 1902 to 1905 of this instrument as cited. ↩
Fannie Mae Single Family Selling Guide, B2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold Estates. Governs conventional conforming lending; portfolio and non-conventional lenders set their own requirements. ↩
Escambia County Official Records, OR Book 9235, Page 1897, Instrument 2024088844, “Amendment to Single-Family Residential Lease”, Santa Rosa Island Authority and Steven C. and Martha K. Luppert, recorded November 21, 2024. Original lease May 1, 1957, OR Book 487 Page 766. Recites the renewal election under the same paragraph fourteen. ↩
Escambia County Resolution R2011-77, adopted May 5, 2011, and the joint county resolutions of December 2010. Pensacola Beach Advocates, “Fee Simple Title”, recording passage in the United States House in February 2014 and the statement of June 1, 2019 that the bill was dead. The Okaloosa County leasehold conversion application, covering Okaloosa Island and Holiday Isle, is referenced only to distinguish it from Pensacola Beach. ↩
Santa Rosa Island Authority, written response from the Assistant Manager of Administration and Leasing, August 26, 2026, answering questions on renewal eligibility, cost, process and timeline. Under Florida’s public records law, which the Authority states in its own correspondence, this response is a public record. ↩
Escambia County Official Records, OR Book 9218 Page 417, the 1952 restated lease recorded October 16, 2024, and OR Book 9101 Page 1123, the assignment dated January 23, 2024. The recording gap and its consequence are recited in the instrument at note 2. ↩
Santa Rosa Island Authority residential leases for two adjacent lots in Block 50, First Addition to the “Villa Segunda” residential subdivision on Santa Rosa Island, Plat Book 4 Page 17, Escambia County. One is a ninety-nine year term running from April 5, 1969, recorded at Official Records Book 497, Page 660. The other is a ninety-nine year term running from March 19, 1970, and supersedes an earlier lease of the same property. Both are held by the authors. Paragraph fourteen is identical in both. The terms described are specific to these two instruments and are not representations about any other parcel. ↩
Santa Rosa Island Authority, Board Policy Manual, current as of July 22, 2026, Policy 1.24 “Residential Leases and Amendments” and its exhibits: the Single-Family Residential Lease (Exhibit A) and the Amended and Restated Single-Family Residential Lease (Exhibit B) both place the renewal right at paragraph 19, headed “RENEWALS,” while the Amendment to Single-Family Residential Lease (Exhibit C) recites renewal “pursuant to paragraph fourteen (14) of the Lease.” ↩
1108 Ariola, LLC v. Jones, 139 So. 3d 857 (Fla. 2014). Leaseholders on Santa Rosa Island in Escambia County are equitable owners of the improvements for ad valorem tax purposes notwithstanding that their leases were neither perpetually renewable nor coupled with a nominal purchase option. ↩
Island Resorts Investments, Inc. v. Jones, 189 So. 3d 917 (Fla. 1st DCA 2016), and Beach Club Towers Homeowners Association, Inc. v. Jones, 231 So. 3d 566 (Fla. 1st DCA 2017). Both concern Pensacola Beach parcels; in Beach Club Towers the association conceded the structures remained taxable and the court reversed as to the land only. ↩
Accardo v. Brown, 139 So. 3d 848 (Fla. 2014), the Navarre Beach companion case to Ariola, decided the same day. The quoted sentence appears in Ariola, 139 So. 3d at 859, distinguishing Accardo. ↩
Further reference, not cited above: island-wide covenants and restrictions dated February 10, 1949, Deed Book 294 Page 303, to which the lease is expressly subject (OR 9235/1903, paragraph 6).