Condominium Ownership

[Roger Murdock]

Is there anything inaccurate with the following language:

"the fee simple interest in the condominium unit"

-or-

"the leased fee interest in the condominium unit"

If these are not correct, what is the proper phraseology?

 

[Ted Martin]

My inclination is "Fee Simple" since absolute ownership of a unit based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements including the land.

 

[c w d]

Condos are fee simple ownership. You just don't own the land on which it sits and only a portion of the adjoining walls.

 

[Mike Boyd]

Ted has it right. BUT......Why not just check the fee simple box? We don't CREATE legal descriptions. We quote what is written on the deed or title report.

 

[Mztk1]

Both are correct.

Fee simple if you are appraising the market value of all property rights, leased fee if you are appraising the value of a landlord's interest in the unit.

 

[Mike Boyd]

Both are correct.

Fee simple if you are appraising the market value of all property rights, leased fee if you are appraising the value of a landlord's interest in the unit.

LANDLORDS interest?

 

[Mztk1]

LANDLORDS interest?

Leased Fee (from some real estate law website):
The landlord's ownership interest of a Property that is under Lease. Its value is based on the anticipated income from Rent, and the reversionary property value upon lease expiration.

So you can appraise the leased fee interest in a condominium. It may not be a common thing to do, but it without a doubt can be done.

 

[BUCKET]

Condos are fee simple ownership. You just don't own the land on which it sits and only a portion of the adjoining walls.

you own an "undivided" interest in the coomon areas and complex. nothing is defined.


bucket

 

[Mike Boyd]

Leased Fee (from some real estate law website):
The landlord's ownership interest of a Property that is under Lease. Its value is based on the anticipated income from Rent, and the reversionary property value upon lease expiration.

So you can appraise the leased fee interest in a condominium. It may not be a common thing to do, but it without a doubt can be done.

I thought the leased fee interest was that of the tenant on a long term lease. So, if you are appraising the Landlords interest in a leased property, all RENTED or leased properties should have the leased fee box checked. Is that right? In all my 900 years I have never done it that way and no one has objected yet. Live and learn. The next rented property I do I will check the leased fee box (and give the underwriter a heart attack). What if it is a 2 unit property, one of which is owner occupied? Half fee simple and half leased fee?

 

[Mztk1]

I thought the leased fee interest was that of the tenant on a long term lease. So, if you are appraising the Landlords interest in a leased property, all RENTED or leased properties should have the leased fee box checked. Is that right? In all my 900 years I have never done it that way and no one has objected yet. Live and learn. The next rented property I do I will check the leased fee box (and give the underwriter a heart attack). What if it is a 2 unit property, one of which is owner occupied? Half fee simple and half leased fee?

As far as I know, Mike, there is no leased fee box only a lease hold box. That is, if we are talking about the URAR.

See what 900 years of checking only the Fee Simple does! I bet 75% of appraisers or more think that box says "leased fee".

BTW, I wouldn't appraise the "leased fee" interest of a residential property just because it is rented. I'd only do it if that is the value the client was looking for. The leased fee value, as far as I am aware, is the value of the lease plus what the market value of the property will be at the end of the lease. I'd have to break out a calculator and a text book to get through it. It usually just applies to commercial property where long term leases are in place and the income approach is a reliable approach to value. In my opinion, the "Income Approach" we do in 1 to 4 family appraising is really just a spin on the sales comparison approach. It is not like doing the real deal.