Condominium Ownership

[Carnivore]

In North Carolina a residential lease must be in writing and can not exceed three years.

Most typically a lease is 1 year. Upon experation of the original term of the residential lease the term goes month to month. All other parts of the original written lease are still enforceable.

So again it depends on the State.
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Terrell,

right you are about fee simple. Some land may still be fee simple. I know much of the land in texas is not fee simle because someone else owns all the mineral rights. No one that stupid to give up the oil!!

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I just finished a review on a condo appraisal report. The lady appraiser really missed a biggee that she would not have missed had she actually looked at the condo docs. FTR, they are readily available in my area on line. She had no excuse.

 

[Brad Ellis]

Moh,

In a practical terms, the term of said lease must be very specific and in writing because the lease is a written contract by which an owner of an asset like a home, a condo or an apartment grants a tenant the right to the exclusive possession and use of that asset for a specified time and under specific conditions for specific periodic rents. A long-term written lease creates a leasehold interest, which can be mortgaged or traded. A short term written lease, although, with the same leasehold interest and right is not practically tradable or mortgageable because the lessee’s rights and interest is going revert back to the lessor in a short period of time.

Please read my response again. That statement refers to how long the lease must be before an appraiser can calculate the leasehold interest. You used the term "long term"- so just how long is that?

Brad

 

[moh malekpour]

Moh,



Please read my response again. That statement refers to how long the lease must be before an appraiser can calculate the leasehold interest. You used the term "long term"- so just how long is that?

Brad

Brad,
Here is my answer to your question on how long is long for a long term lease:

The lease term has to be long enough to exceed the term of the loan and be officially recorded as a leasehold estate or deed.
If the lease is month-to-month, year-to-year, it is not going to be recorded and issued a leasehold estate deed on it but even if it did, then it could be traded or mortgaged if any lender is willing to lend money for less than a month or a year or 3 years for that matter.
What happens to the lender if the lease expires at the end of 3 or 4-year lease and the loan was a 5-year balloon? The lease is going to expire at the end of 3 years and reverse back to the owner of fee simple estate and lender has nothing in hand to collect the loan then.
I agree with your statement that in a leased property, there are at least two different estates. Fee simple and leasehold but I disagree that the leasehold is going to diminish the fee simple estate. The fee simple estate of the property, which is leased, will be conditioned for the duration of the lease but is not going to diminish. It is like having a mortgage or tax lien on a fee simple estate property. The fee simple estate property cannot be sold unless the tax or loan liens are cleared or assumed. The same thing is true with the leasehold estate on a fee simple estate property.

Why lenders are willing to lend on a real property with a leasehold estate or leased land property but are not willing to a tenant of a real property although both of them legally are tenants?
In the leasehold estate of real property, the owner of the property who is a tenant of the land of that property has a recorded lease on that land with a long term duration and expiration date in which the land ownership will transfer to the tenant at the expiration date and because of the term and condition of the lease, the leasehold estate is recorded and deeded.
In the rented real property, the tenant is not the owner of the property and the lease contract is not recorded and has no leasehold estate deed even if the lease term is for 3 years, therefore the tenant cannot practically get a loan on that leasehold right because it is hard to put value on the short term residential rent and secondly no lender is going to lend on a estate which is going to last one month or one year even if they could get a value for that leasehold estate.

 

[Couch Potato]

If I told you that you are all wrong, what would you say?

You do not have fee simple interest in reality although some define it as such - even title companies. Fee simple is an estate without limitation and includes the air rights, surface rights and mineral rights. You have a fee interest but not fee SIMPLE. SIMPLE means the whole bag of marbles.

In a condo you have a fractional ownership of a fee title in air rights space unit defined in 3 dimensions (unless it is one story, aka townhouse) and you have an undivided interest in the common areas.

The fact some title companies may refer to it as "fee simple" aside, the truest definition of "Fee Simple" is

•Fee Simple title to property includes all the rights, air, surface, water, hunting, and minerals. Anything less than all the rights is something else. "Fee in surface" "Fee in minerals" "Fee title" whatever...but not fee simple.

The URAR makes you a liar.

If the fee simple interest to which the URAR was referring was, "that chunk of land over there," your statements would be correct about it making a liar out of everyone using it. However, the URAR is referring to the fee simple interest in the real property described as the subject in the report. Fee simple refers to the unencumbered right to sell the property described. That is what is the subject of most appraisal reports. Your interpretation would be valid only if land was the only thing defined as real property. The words in the definition cannot be ignored; they must be clearly defined too.

 

[Brad Ellis]

Moh,

Very good thing you are not a commercial appraiser- you would starve.

So you have to have a lease equal to or longer than the term of the mortgage, eh? Bull droppings.

Brad

 

[moh malekpour]

Moh,

Very good thing you are not a commercial appraiser- you would starve.

So you have to have a lease equal to or longer than the term of the mortgage, eh? Bull droppings.

Brad

Brad,
I don't know why did you jump on the commercial appraisal. I am not a commercial appraier nor is the topic of this thread about the commercial and I am not sure if you are a commerical appraiser but please answer clearly to this question without using a foul language.
what would you do as a lender on a leasehold estate if your loan term is longer than lease term on that estate? Let me give you an example to make it easier for you:
Suppose you made a 10 year loan on a leasedhold estate and the lease term on that estate was only for 3 years but at the end of 3rd year, the lease reverted to the the lessor. what would or could happen to your loan? You loaned on the leasehold estate, the leasehold estate didn't exist after expiration which was at the end of 3rd year. how do you collect your loan? Now, be civil please and don't get exited. Just give me some reasons, logic and convincing examples. I love to read your golden words and I never call them bull droppings even if I disagree with them.

 

[Brad Ellis]

Moh,

Care to let us know just who loans on 1-4 unit property leaseholds? I do not know of one lender who does that nor do I know of any who would even lend on a long term leasehold for 1-4 unit properties.

But I know plenty who would loan on the leased fee estate.

The only exception would be for those native american lands where long term leaseholds exist- and since they are typically 99 years your example is moot. Bring it up again in about 50 years.

Brad

 

[Carnivore]

Moh,

Care to let us know just who loans on 1-4 unit property leaseholds? I do not know of one lender who does that nor do I know of any who would even lend on a long term leasehold for 1-4 unit properties.

But I know plenty who would loan on the leased fee estate.

The only exception would be for those native american lands where long term leaseholds exist- and since they are typically 99 years your example is moot. Bring it up again in about 50 years.

Brad

Brad,

Wachovia loans on leasehold Estates. They sent me several of these assignments, of which i turned down due to the fee. These were imrpovements located on Davidson College Land, in Davidson North Carolina.

leasehold financing
A form of secondary financing in which a mortgage is secured by the tenant's interest in a property.

 

[moh malekpour]

Moh,

Care to let us know just who loans on 1-4 unit property leaseholds? I do not know of one lender who does that nor do I know of any who would even lend on a long term leasehold for 1-4 unit properties.

But I know plenty who would loan on the leased fee estate.

The only exception would be for those native american lands where long term leaseholds exist- and since they are typically 99 years your example is moot. Bring it up again in about 50 years.

Brad

Brad,
Many lenders will lend on condos or SFR homes with leasehold estate ownership or title. I have appraised many of them and have read their leasehold documentations and documented them in my reports.
According to my MLS, there were 47 of them sold in Orange County just last 2 months, 7 of them were in Huntington Beach and according to the same data, currently there are232 of them are listed in MLS, 22 of them are in Huntington Beach. All of their agents have marked leasehold title and have mentioned the amount of lease fees in the MLS usually in yearly basis.
These are all leasehold estates which are sold or are going to sell and are financed or are going to be financed by regular lenders.

 

[Brad Ellis]

Moh,

Suppose you made a 10 year loan on a leasedhold estate and the lease term on that estate was only for 3 years but at the end of 3rd year, the lease reverted to the the lessor

Of all of those please show us one that meets anything like these time terms.

You will find that this is not the case. What they are loaning on- and would be loaning on as in the case of the college land in the other post- is on the improvements built upon leased land. Of course it is a leasehold- in exactly the same fashion as for one of the native american cods projects. Northing more.

If the term of the lease is that short they will not be getting the loan. That simple Moh. Nobody is loaning out money on leaseholds that run for 3 years unless it is a very short term mortgage. Period.

Brad