Leasehold vs. Fee Simple

Each day I have buyers asking about the difference of Fee Simple Property and Leasehold Property, asking to explain Leasehold Property or wondering why Leasehold Properties will sell far below the price of a Fee Simple Property. Since these are everyday questions and inquiries I thought it would be a good article to discuss.

According to Realtor.org here is how they define each:

Fee Simple – an unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.

Leasehold – a way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.

When a Leasehold property is purchased, it will usually have a monthly lease payment due to the fee owner and an expiration date of the lease. Upon expiration of the lease, the fee owner will have the option if they want continue to lease the property or take possession of the property. Leasehold property is a good option to use or occupy property for an extended period of time; however it needs to be properly researched to be done right.

If you still have questions regarding Leasehold and Fee Simple property feel free to contact me.

For other Blogs on Oahu Real Estate or to Search Hawaii Real Estate visit us at www.HawaiiRealEstateSite.com