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Why You Should Know What Fee Simple Estate Is

November 14 2018
by Leisl Bailey

Fee simple estate ownership allows this happy family outside their home to be the full owners.

If you own property, it’s important to understand the conditions of that ownership.

Here’s everything you need to know:

What is fee simple estate ownership?

Most property owners in the US enjoy fee simple ownership.

It is the most common type of ownership and entitles the owner to full enjoyment of the property. The only things the homeowner needs to be wary of are applicable zoning laws and deed restrictions.

Under fee simple ownership, you can pretty much do whatever you want with your real estate, as long as it’s not breaking the law. You can sell it to whomever you want, whenever you want. You can rent it out. You can even will it to someone.

In fact, this type of ownership is so popular that it has more than one common name. Sometimes homeowners call it “freehold ownership,” “fee ownership,” “estate of inheritance,” “absolute ownership,” or “fee simple absolute estate.”

Leasehold Ownership

Leasehold ownership, on the other hand, means that you have full access to a property but you do not actually own it. For example, when you buy a condo, you only buy your particular unit, not the land underneath it or the entire building.

When you rent a home, you can enjoy it fully, however, it is not legally yours, so you cannot will it. You also need to abide by the terms of your rental agreement.

Fee Simple vs. Leasehold Ownership: Which Is Better?

This is a new name for the leasing vs. owning question.

It is an age-old debate with no clear answer. This is because it depends on what your personal preferences are, as well as the current housing market in your immediate area.

Fee Simple Defeasible vs. Fee Simple Absolute Ownership: What’s the Difference?

The definition of fee simple defeasible ownership is well, simple.

This type of ownership allows for five possible restrictions to full enjoyment. They are taxation, ownership that could potentially revert to the state, eminent domain, police power, and deed restrictions.

If you own your land with absolute ownership, none of these restrictions can apply.

Another type of ownership that could fall into this category is that of a life estate.

In a life estate, a property only belongs to a person for the duration of their life. When they pass away, the property is given to another person or reverts back to the original owner immediately.

Common Terms to Know

  • Expiration Date – when a lease ends.
  • Fixed Period – the time that the rent amount for a lease is the same.
  • Lease Rent – the monthly amount of rent.
  • Lease Term – how long the lease is to be.
  • Leased Fee Interest – this is the amount of money a landowner will accept to grant simple fee ownership to a renter.
  • Renegotiation Date – this is when the fixed period expires and the lease is up for renegotiation.
  • Reversion – when the renter gives the property back to the owner.
  • Surrender – the terms of the reversion.

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