What are the consequences of defaulting on a ground lease?

If you are involved in a ground lease and you default on your mortgage with a lender, you will have to lose the improvements that you have made to the property. If the ground lease was a subordinated one, the bank can actually foreclose on the building and the land below it. If the arrangement was an unsubordinated ground lease, then the bank will not be able to foreclose on the land itself. The bank can take possession only of the buildings that have been constructed on top of the land with the money that was originally borrowed.