Life estate VS fee simple

[PropertyEconomics]

Thinking is something I don't do on such matters. I simply state what I know loudly in the report with something like "The appraised value of the subject is based on the Fee Simple interest but the subject is rented for $2,800 per month on a four year lease. It is my understanding that in the State of Florida residential leasing agreements are limited to a one year time frame, but I am not an expert in the law and any questions on the matter should be directed to a qualified professional. Long term leasing could have an effect on property value but determining the effect in this particular assignment is beyond the scope of work".

I wish you the best on your life estate assignments Mr Klos.

 

[Fred]

All language is a metaphor Steve, and to some extent it is all inscrutable so forgive me in advance for my enigmatic style.

The scope of work for a FNMA residential mortgage assignment

The post asked about life estates, not FNMA. And the scope of work is something that the appraiser determines (see Scope of Work Rule).
PS: None of that is metaphorical.

The appraiser must identify the property rights to be appraised as
"fee simple" or "leasehold." (Bold emphasis mine.)
There is nothing else on the topic, those are our choices.

If that is what you think, then your choice is to avoid appraising other interestests rather than misidentifying them because some form only has two check boxes.

 

[Mztk1]

The post asked about life estates, not FNMA. And the scope of work is something that the appraiser determines (see Scope of Work Rule).
PS: None of that is metaphorical.

The original post was concerning a lender stip: Lender = Mortgage work = URAR = URAR Scope of Work = Fannie Mae.

"Scope Of Work" is in itself a metaphor, but being a dead metaphor it typically goes unnoticed. Understand?

 

[Fred]

The lease-fee vs fee simple debate was a couple of months ago and I took that to the guys at the appraisal standards board. I was told I can appraise the fee simple interest of a property that is leased without making it a hypothetical condition.

As long as you are not appraising something "contrary to what exists," then you are not using an HC. But I have no idea what you mean by "the" fee simple interest. If you are going to appraised a leased property as if it isn't leased, then that would be contrary to what exists.

 

[Mztk1]

I wish you the best on your life estate assignments Mr Klos.

And to you on your lender assignments, the same.

 

[Fred]

The original post was concerning a lender stip: Lender = Mortgage work = URAR = URAR Scope of Work = Fannie Mae.

Guess again.

"Scope Of Work" is in itself a metaphor, but being a dead metaphor it typically goes unnoticed. Understand? No, I don't understand.

Scope of Work is a technical term with a specific definition. Maybe if you used the term correctly, you could avoid developing erroneous syllogisms like the one quoted earlier in this post.

 

[Hamlet]

:new_popcornsmiley:

 

[The Warrior Monk]

The scope of work for a FNMA residential mortgage assignment is pre-printed in the URAR, also Fannie's guidelines become our scope of work with accepting an assignment that is to conform.

If the assignment doesn't conform, either don't accept the assignment, or discuss the situation with the client. Fannie doesn't lend on all properties.

Now I suppose in some lofty tower somewhere the appraiser gets to "determine" the scope of work, but all we guys on the ground can do if we do not agree with Fannie guidelines is to quit doing their work.

The accepted scope of work for Fannie assignments states:

The appraiser must identify the property rights to be appraised as
"fee simple" or "leasehold." (Bold emphasis mine.)

Those two choices are their for a obvious reason...that's what Fannie will lend on. If the property rights that actually exist aren't either one of those choices, that is a big red flare in the SOW. The appraiser should not be checking either one of those boxes. Consultation with the client at that point is a must.

Furthermore, the appraiser may not be an expert in title matters, but that actually is not relevant for two reasons:

1. The appraiser must identify the property rights being appraised; and
2. The appraiser knows that the fee simple estate does not exist and cannot ignore a relevant fact.

Property rights may not seem like an issue if one deals only with appraiser fee simple residential properties. However, the rights being appraised are vital elsewhere. Examples: Mineral rights, air rights, water rights, easements, etc.

 

[Webbed Feet]

Hmmmmmmm.......

I strongly recommend some CE on estates in land for a few people. A life estate does not fall under fee simple absolute in any heirachy of estates that I know of, or ever plan on knowing of. A Life Estate is a Freehold Estate. It is NOT .... Fee Simple, Defeasible (a couple of you claiming it is know who you are), determinable, or condition subsequent.

THE SUBDIVISION OF A FREEHOLD ESTATE IS INTO EITHER FEE SIMPLE ESTATES OR LIFE ESTATES! A Life Estate does not qualify as a fee estate as it is NOT an estate of inheritance.

A Life Estate is not "Defeated" by the death of the Life Estate holder, or holders, notice the plural, nor by any other measuring life. It either "reverts, or "remains." Reverting to a grantor or remaining with a third party.

And after reading this thread, I see no way possible the O.P. ever properly identified the SOW in the first place.

Webbed.

 

[Mztk1]

As long as you are not appraising something "contrary to what exists," then you are not using an HC. But I have no idea what you mean by "the" fee simple interest. If you are going to appraised a leased property as if it isn't leased, then that would be contrary to what exists.

Are you a Platonist, Steve?