When it comes to owning real estate, there are many different types of ownership structures available. One of the most common is known as fee simple.
In this blog, we’ll explain what fee simple means, and how it differs from other forms of ownership. Some important things you should know if you’re considering purchasing property under this type of ownership.
What is Fee Simple?
Fee simple is a type of real estate ownership that provides the owner with the greatest possible rights to use and dispose of the property. When you own property in fee simple, you have complete control over it. It is subject only to any applicable laws or regulations.
This means you can use the property in any way you see fit, sell it, give it away, or even destroy it if you so choose.
How Does Fee Simple Differ from Other Forms of Ownership?
Fee simple is often contrasted with other forms of real estate ownership. Such as leasehold and life estate. With a leasehold, the owner has the right to use the property for a specified period of time.
But ownership reverts to the landlord at the end of the lease. With a life estate, the owner has the right to use the property for their lifetime, but ownership passes to someone else after they die.
Fee simple also differs from other types of ownership structures in that it can be subject to various types of restrictions or encumbrances.
For example, a property owner may choose to place a deed restriction on their property. Which limits what can be built on it or how it can be used. Similarly, a mortgage lender may place a lien on a property to secure repayment of a loan.
Important Considerations for Fee Simple Owners
If you’re considering purchasing property under fee simple ownership, there are several important things you should keep in mind:
- Property Taxes: As the fee simple owner of a property, you are responsible for paying all property taxes associated with it. This includes any state or local taxes, as well as any assessments for public improvements such as roads or sewers.
- Zoning Laws: While fee simple ownership gives you a great deal of control over your property. You are still subject to zoning laws and other land use regulations. This means that you may not be able to use your property in any way you see fit. Especially if your proposed use conflicts with local zoning ordinances.
- Liens and Encumbrances: As mentioned earlier, a property under fee simple ownership can be subject to various types of liens or encumbrances. If you’re considering purchasing a property, it’s important to conduct a thorough title search to identify any such issues before you close the deal.
- Eminent Domain: In certain circumstances, the government may choose to exercise its power of eminent domain. To take possession of a private property for public use. While this is a rare occurrence, it’s important to understand your rights. As a fee simple owner in the event that it does happen.
Final Word
Fee simple is the most common type of real estate ownership and provides property owners with the greatest possible rights and control over their property.
However, it’s important to understand that owning property under fee simple is not without its challenges and responsibilities.
If you’re considering purchasing property under fee simple ownership, it’s important to conduct your due diligence and consult with a real estate professional. To ensure that you fully understand your rights and obligations as an owner.
Frequently Asked Questions
Why is it called a fee simple?
The term "fee" in fee simple comes from the old English word "feodum," which referred to land held by a person or group in return for services or duties. "Simple" is used to distinguish it from other more limited forms of ownership, such as a life estate or leasehold.
Is fee simple a good thing?
Fee simple ownership is generally considered a good thing as it provides property owners with the greatest possible rights and control over their property.
What is an example fee simple?
An example of fee simple ownership is when an individual purchases a house and the land on which it sits.
What does in fee simple mean?
Fee simple means the most complete form of ownership of real property, giving the owner absolute rights to use, transfer or dispose of the property as they wish, subject only to applicable laws and regulations.
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