Condominium vs Fee Simple ownership

[Wayne Henry]

Made a change to my Condo templates
Changed it from Fee Simple to Condominium, am I wrong because I got an underwriter sending this

Please correct property rights type - Condo is not an alternative to Fee Simple or Leasehold.

Now I have used Fee simple all along but I figured I would change it because wouldn't the definition of Fee Simple not convey all of the rights due to the subject being a Condo.

 

[timd354]

Made a change to my Condo templates
Changed it from Fee Simple to Condominium, am I wrong because I got an underwriter sending this

Please correct property rights type - Condo is not an alternative to Fee Simple or Leasehold.

Now I have used Fee simple all along but I figured I would change it because wouldn't the definition of Fee Simple not convey all of the rights due to the subject being a Condo.

The underwriter is correct and you are incorrect. The typical purchase of a condominium unit is a fee simple purchase of that unit, which includes all of the property rights of that condominium unit. Pull a couple of deeds transferring a condominium unit, which is easy to do online in Maryland, and you will see that these are fee simple deeds.

 

[PropertyEconomics]

Think about what is being purchased .... there is fee simple ownership of the "unit" and co ownership of the common elements with all the other owners within the development.

 

[Walter Kirk]

My understanding of the term "Fee Simple" is that it is an abreviation of "Fee Simple Absolute" which means that the title held contains ALL of the rights to the property.

Condominium ownership does not include all of the rights. I doubt that a condo owner has mineral rights, the right to make any changes to the exterior of the property or even the right of disposition since some condo's limit rentals. Condo's are famous for regulating everything from parking to hanging laundry. Notable limits include the ability to place for sale or even political signs on the property. You must also consider the duty to pay condo fees, if you don't the association may place a lien on the property. Condo ownership and Fee Simple onership are very different animals.

 

[RustNeverSleeps]

Seems like there is not a consensus.

Our MLS started letting realtors list detached condos as houses, but they have to list the ownership as common interest. That is the only way to filter the search, but I don't think it answers the question.

 

[timd354]

My understanding of the term "Fee Simple" is that it is an abreviation of "Fee Simple Absolute" which means that the title held contains ALL of the rights to the property.

Condominium ownership does not include all of the rights. I doubt that a condo owner has mineral rights, the right to make any changes to the exterior of the property or even the right of disposition since some condo's limit rentals. Condo's are famous for regulating everything from parking to hanging laundry. Notable limits include the ability to place for sale or even political signs on the property. You must also consider the duty to pay condo fees, if you don't the association may place a lien on the property. Condo ownership and Fee Simple onership are very different animals.

Properties in many PUD's have the exact same limitations that you describe and I am sure that you would argue that most properties in PUDs are not fee simple. A condo owner would also have a perecentage interest in the mineral rights that are owned by the condominium association that lie under the common ground.

Additionally, if your position is correct then all of the title attorneys and title companies in Maryland must be wrong as every condo deed in Maryland that I have ever seen was a fee simple deed....see the attached deed for a condominium unitfrom the public records in Maryland...notice the words "fee simple" in the deed....this is a typical deed for a condo transaction here.

 

[Terrel L. Shields]

My understanding of the term "Fee Simple" is that it is an abreviation of "Fee Simple Absolute" which means that the title held contains ALL of the rights to the property.

Technically, I agree with Walter. Condo ownership is something less than "Fee Simple Absolute". Having said that no one outside a few of us resource appraisers ever speak of limited Fee Simple, Fee in Surface, or something less than "fee simple". In truth, very few properties are "fee simple". Easements, deed restrictions, HOA's, POA's, etc. all subtract some element from "absolute" ownership.
But when a property has a "Limited Warranty Deed".....why do you think the word "limited" is in there, even when elsewhere it says "fee simple"?

 

[Wayne Henry]

Properties in many PUD's have the exact same limitations that you describe and I am sure that you would argue that most properties in PUDs are not fee simple. A condo owner would also have a perecentage interest in the mineral rights that are owned by the condominium association that lie under the common ground.

Additionally, if your position is correct then all of the title attorneys and title companies in Maryland must be wrong as every condo deed in Maryland that I have ever seen was a fee simple deed....see the attached deed for a condominium unitfrom the public records in Maryland...notice the words "fee simple" in the deed....this is a typical deed for a condo transaction here.

I hear you Tim, and what sparked me to question this is a thought pattern leaning towards Walters rational. I have used Fee Simple for years and it just popped in my mind so I gave it a try and was shot down immediately by the underwriter...so why is there another box on the condo form anyway? I have compromised both rationales and will use the fee simple and type in Condominium in the space after other, not checking other. I will put Fee Simple/Condo on the second page for the subject and sales in the column that says Fee Simple/leasehold in the sales comparison section. Well I will try it until another underwriter tells me to change it, lol. What do you all think about that?

 

[Terrel L. Shields]

I agree that you are going to be more correct than simply saying "Fee Simple"...again, technically if there is some sort of deed restriction then the ownership is encumbered and cannot by definition be "absolute"...

 

[timd354]

I hear you Tim, and what sparked me to question this is a thought pattern leaning towards Walters rational. I have used Fee Simple for years and it just popped in my mind so I gave it a try and was shot down immediately by the underwriter...so why is there another box on the condo form anyway? I have compromised both rationales and will use the fee simple and type in Condominium in the space after other, not checking other. I will put Fee Simple/Condo on the second page for the subject and sales in the column that says Fee Simple/leasehold in the sales comparison section. Well I will try it until another underwriter tells me to change it, lol. What do you all think about that?

Wayne,

My thought is that typing Condominium in the space after "other" and putting in Fee Simple/Condo on the second page for the subject and the comps would certainly not be incorrect, but will likely cause a problem with some underwriter somewhere since they will not be used to seeing it done that way. I don't see why you would even want to fight this particular battle........it seems to me to be a complete waste of time for which there is absolutely nothing to be gained.