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About Fee Simple In Real Estate
It is a great feeling of freedom when you become a homeowner. However, you might need to make sure that you have the complete ownership right of the land and the property built on top of it so that you have the freedom to modify it as per your requirement.
In this post, we will be learning about fee simple in real estate which is one of the most common types of complete ownership in the country.
What Is A Fee Simple Ownership?
A fee simple in real estate is complete and permanent ownership of land and any buildings or structures on it.
In fee simple ownership, the owner owns the land outright with entire rights to modify the property as required keeping the zoning parameters in check.
The fee simple ownership is only related to real estate including land, immovable home structures, and any property directly attached to it, such as roads, ponds, machinery, or buildings.
In most parts of the country when an individual purchases a home, it is generally bought under fee simple ownership.
This means, you own the land and everything that sits on it with the rights to modify the structures as you see fit, and your name is on the title.
In the case of apartments or condos, the owner of the individual apartments will receive a fee simple with a full right for the unit subject to the contract which is called a restricted covenant.
All the owners have a common right to use public places and carry specific responsibility to maintain these areas.
You have the right to sell land and buildings whenever you want. You can also transfer this property to anyone you want.
Being said that, the owner could still lose ownership of the land and the property. If the owner in fee simple ownership defaults on property taxes or commits any violation, the government agencies can place liens on the property.
These interested parties can repossess the property through a foreclosure process.
What Are The Types Of Fee Simple In Real Estate?
There are two types of fee simple ownership in real estate, namely absolute fee simple ownership, and defeasible fee simple ownership.
1 - Absolute Fee Simple Ownership
It is the best form of ownership for a real estate property. In this type of fee simple ownership, the owner has complete rights and freedom to do any modification that they like on the land.
There are just a few things that the owner has to adhere to such as local laws, zoning laws, and liens.
Some zoning laws restrict property owners from operating retail outlets in areas designated as residential and from paying local property taxes. You have the right to sell, transfer or develop the property according to your wish.
While passing the property on to your heirs you are allowed to add certain circumstances to the final settlement.
Some conditions state that the main building cannot be demolished and others may state that the property stays in the family so the future heirs cannot are unable to sell it.
You can also choose to be the sole owner of the land and not give it to anyone as long as you live. As long as you pay your mortgage and property taxes, you won’t be in trouble with the law or with individuals.
2 - Defeasible Fee Simple Ownership
There is a slight difference between Absolute Fee Simple ownership and Defeasible Fee Simple ownership. The power to the owner in Defeasible Fee Simple ownership is less.
If the owner meets specific conditions set by the previous owner, he or she will have full ownership of the land for life. If the owner violates these conditions, they might lose ownership.
For example, the previous owner may set a condition where the new owner should always keep the property residential.
To convert that property into a hotel or other place of business would be to violate the covenant contract and you might lose the ownership of the property. In such an instance, the property would be returned to its original owner.
Conclusion
Fee Simple in Real Estate is the best choice for those who want the freedom to transfer, modify and maintain their property without any restrictions.
When you buy real estate, you need to exercise your rights, so make sure your ownership is clear and you adhere to the changes in state law.
