What is the difference between freehold and fee simple

In a fee simple ownership, the return on the initial investment would make the purchase worth it. An ideal scenario is for someone to get a property with the intention of using it as a vacation rental. The choice between fee simple and leasehold ultimately depends on personal preference.

Many older people see the leasehold as a better option due to the limited amount of time they intend to enjoy the property. To be sure about the entire process, we recommend consulting with an attorney who is knowledgeable about leasehold contracts. Save my name, email, and website in this browser for the next time I comment.

Since fee simple is the most familiar form of ownership, this is what most people choose. Leasehold On the other hand, a leasehold involves a lessor property owner and a lessee. Important Things to Know About Leasehold Lease rent The lease rent is the amount paid to the lessor for the use of their land.

What is the opposite of fee simple? Fee simple is sometimes called fee simple absolute because it is the most complete form of ownership. A fee simple buyer is given title ownership of the property, which includes the land and any improvements to the land in perpetuity. What are the characteristics of a fee simple estate? A fee simple is an interest in property, often land, that has two unique characteristics : The property may be possessed infinitely.

May be inherited by one's heirs. The owner of a fee simple absolute has the following rights:. The right of possession. The right of alienation. The right of exclusion. What is a qualified fee estate? Definition of qualified fee. What can a person who holds property in fee simple absolute do with that property?

The person who holds real property in fee simple absolute can do whatever he wants with it, such as grow crops, remove trees, build on it, sell it, or dispose of it by will. The law views this type of estate as perpetual.

A life estate is usually created by deed but can be created by a lease. What are the types of estate? The four major types of estates are:. You should always get advice from your own lawyer and other registered professionals — what is written here is not intended to replace that advice. It is usually the simplest kind of ownership. If you have a freehold property, you own the land and generally anything built on the land unless there are any registered or unregistered interests.

With leasehold ownership, someone else owns the land, and you pay rent to them. You purchase an exclusive right to possession of the land and the buildings on it for a specific period of time according to terms set out in a lease. In some cases, you will own the buildings or other improvements on the land. At the end of the lease term, you will need to return the land and the buildings to the freehold owner in the condition specified in the lease.

Ground rent can change and will usually increase. Increased rent and a shortening lease term can have a serious impact on your ability to sell your leasehold interest at a later date.

Unit title ownership also referred to as a 'strata title' or 'stratum estate' is most common in a building where there are multiple owners. Becoming a unit title holder means you automatically become a member of the body corporate, which consists of all the unit owners acting as a group.

You will usually pay an annual fee a levy to the body corporate, which will go towards budgeted body corporate expenses. The fee will include costs like insurance and management expenses, contributing to a long-term maintenance fund LTMF and any services the body corporate arranges for its members for example, rubbish collection and cleaning communal areas. Any body corporate costs that have not been included in the budget are also payable by the unit owners, usually by way of a special levy.

These will set out how you and the other owners can use your units and the common areas. Make sure the LTMF has enough money in it to pay for the ongoing repairs and maintenance detailed in the plan. Chat with other unit owners within the complex to see how the body corporate operates.

The Tenancy Services website has helpful information on unit titles for all property owners not just landlords including the Short Guide to Unit Titles booklet.

Read more about what you need to know when buying an apartment or unit here. A cross lease title will include a plan showing the footprint of the building you are entitled to occupy, called the flats plan older cross lease titles may not supply one. You should check this to see:. Cross lease ownership usually means that changes made to the footprint of an area you are entitled to use exclusively like the building you occupy or your separate garden or to the shared areas must be agreed upon by all or a majority of the owners.

A life tenant cannot leave a property to anyone in their will. However, a life tenant may sell, mortgage or lease the property for the duration of the estate, and thus all contracts would be terminated upon the death of the life tenant.

For example, if Dan dies and the property goes back to Anne, Anne would have the estate in reversion. If Anne dies, then the property would not be Dan's because he had it as long as Anne was alive. This is Joe from PrepAgent, remember to keep it concise and keep it simple.

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