Fee Simple vs Leased Fee

[Ken B]

edit! quickly!

(fine, we will continue to pretend to assume something)

 

[Pittsburgh Pete]

edit! quickly!

(fine, we will continue to pretend to assume something)

Cryptic! Lost me with that one.

 

[Fee4me]

It would probably be best to start a new thread about SR 1-4d if that is going to be the topic of discussion. The original discussion was regarding the appropriateness of using a hypothetical condition (the subject is appraised as if unencumbered by a lease) when asked to value only a fee simple interest for a property encumbered by a lease (and the lease is believed to survive foreclosure, sale, etc.).

 

[Pittsburgh Pete]

It would probably be best to start a new thread about SR 1-4d if that is going to be the topic of discussion. The original discussion was regarding the appropriateness of using a hypothetical condition (the subject is appraised as if unencumbered by a lease) when asked to value only a fee simple interest for a property encumbered by a lease (and the lease is believed to survive foreclosure, sale, etc.).

the two are related and 1-4(d) goes to the argument that the request for a fee simple value is not untoward but mandated.

 

[Fee4me]

the two are related and 1-4(d) goes to the argument that the request for a fee simple value is not untoward but mandated.

I know the issues are related... was just a thought as we were looking others interpretation of the rule.

So you are saying you believe it to be a violation of USPAP (SR 1-4d) to appraise a leased fee interest and to not also report (and subsequently have valued) the fee simple interest?

 

[Pittsburgh Pete]

I know the issues are related... was just a thought as we were looking others interpretation of the rule.

So you are saying you believe it to be a violation of USPAP (SR 1-4d) to appraise a leased fee interest and to not also report (and subsequently have valued) the fee simple interest?

How else would one be able to comment on how the terms and conditions of the leases impact the property value as indicated in SR 1-4(d)?

 

[Fee4me]

I know the issues are related... was just a thought as we were looking others interpretation of the rule.

So you are saying you believe it to be a violation of USPAP (SR 1-4d) to appraise a leased fee interest and to not also report (and subsequently have valued) the fee simple interest?

The rule explicitly states - when appraising a leased fee or leasehold interest you must address the leases affect on "value". What other value is there when you are appraising a leased fee or lease hold estate?

Stop answering questions with questions. If you believe you cannot, under USPSP, appraise a leased fee interest without also appraising a fee simple interest - just say it.

 

[Pittsburgh Pete]

The rule explicitly states - when appraising a leased fee or leasehold interest you must address the leases affect on "value". What other value is there when you are appraising a leased fee or lease hold estate?

Stop answering questions with questions. If you believe you cannot, under USPSP, appraise a leased fee interest without also appraising a fee simple interest - just say it.

I do not believe one can value a leased fee interest without referencing the fee simple interest--otherwise 1-4(d) means nothing.

Had a recent court case where the other appraiser used leases between the property owner and himself, and the property owner and his wife. Leases were nearly 40 times market rents. His value was absurd--had he referenced an estimate of the fee simple value, the absurdity of his conclusion would have been readily apparent to the even most uninformed reader. I believe that is the intent of 1-4(d) so that a leased fee value is not viewed in a vacuum.

 

[Pittsburgh Pete]

The rule explicitly states - when appraising a leased fee or leasehold interest you must address the leases affect on "value". What other value is there when you are appraising a leased fee or lease hold estate?

Stop answering questions with questions. If you believe you cannot, under USPSP, appraise a leased fee interest without also appraising a fee simple interest - just say it.

Doesn't that strike you as a bit like a dog chasing his own tale without another benchmark such as the fee simple value to peg it to? Sorry--that's another question.

 

[Fee4me]

I disagree - No reference to fee simple was necessary - he simply needed to make clear that the contract rent was 40x that of market rent, which significantly increased the value of the leased fee interest.