Fee Simple vs Leasehold

[Joyce Potts]

FWIW,

I am still in the FEE SIMPLE boat with a HC or two and disclosure of the lease.


No comments needed....still working here....

Absolutely. Refer back to post #2.

The fee simple of SFR's are appraised all the time. Some are for refi's and some are sales. The point being--leases are rarely recorded in Florida, therefore, even a title search wouldn't disclose it. So if not disclosed to the appraiser, how would the appraiser know?

Most borrowers are required to sign an occupancy affidavit stating they occupy the property. That's a concern of the lender and their risk assessment.

If it's a sale, it's also a concern of the lender and their risk management as well as the buyer who is purchasing the fee simple interest INCUMBERED BY THE LEASE.

 

[PropertyEconomics]

Again .. if the purchase contract does not extinguish the lease ... then you have the issue to address. Its not that complicated.
Appraise what is there ... after you read the contract ... if the contract results in the lease being extinguished ... then so be it .. appraise the fee simple interest.

 

[Joyce Potts]

Again .. if the purchase contract does not extinguish the lease ... then you have the issue to address. Its not that complicated.
Appraise what is there ... after you read the contract ... if the contract results in the lease being extinguished ... then so be it .. appraise the fee simple interest.

Does the purchase contract extinguish back or ongoing taxes or liens?

NO. They're either settled, sold 'subject to' or the per diem is escrowed.

If a seller sells a property to an unsuspecting buyer where the property still has a six month lease running, but fails to disclose that lease, theoretically, the transaction will close and the fee simple interest is transferred to the new buyer, but the buyer will soon find out he can't take physical possession of the property until the terms of the lease are satisfied.

Can he sue the seller, absolutely. But not for failure to transfer the fee simple interest.

That's like saying whenever you purchase an investment property with a lease in place, you only acquire a percentage of the deed or the fee simple interest. The remainder of the deed/fee simple interest will be delivered when the lease runs out.

This also goes back to the life estate thread and the remainderman.

I'm listening.

 

[Michigan CG]

I'm listening.

Sounds like round 5 just started.....

 

[PropertyEconomics]

Does the purchase contract extinguish back or ongoing taxes or liens?

NO. They're either settled, sold 'subject to' or the per diem is escrowed.

If a seller sells a property to an unsuspecting buyer where the property still has a six month lease running, but fails to disclose that lease, theoretically, the transaction will close and the fee simple interest is transferred to the new buyer, but the buyer will soon find out he can't take physical possession of the property until the terms of the lease are satisfied.

Can he sue the seller, absolutely. But not for failure to transfer the fee simple interest.

That's like saying whenever you purchase an investment property with a lease in place, you only acquire a percentage of the deed or the fee simple interest. The remainder of the deed/fee simple interest will be delivered when the lease runs out.

This also goes back to the life estate thread and the remainderman.

I'm listening.

Well you can bet if you KNEW about the lease as an appraiser and you didnt disclose it to your client ... YOU will be sued.

 

[Fred]

Is the definition of Fee Simple .. an unencumbered estate?

"The" definition? No. A mortgage is an encumbrance. Giving a mortgage terminates the "perpetual" fee simple? I don't think so.

 

[Joyce Potts]

Well you can bet if you KNEW about the lease as an appraiser and you didnt disclose it to your client ... YOU will be sued.

You're going to disclose hearsay of a lease from whom? What if that information concerning a tenant came from an unfriendly neighbor and proved not to be true. And you reported undocumented information that prevented the loan from closing?

Now's who's being sued and why?

Learn to cover thy arse with the documentation.

 

[Joyce Potts]

"The" definition? No. A mortgage is an encumbrance. Giving a mortgage terminates the "perpetual" fee simple? I don't think so.

You just made THE best point, Mr. Hawkings. If an existing mortgage doesn't affect the conveyance of the fee simple interest, why does an existing lease? In fact, generally speaking, the mortgage is recorded whereas a lease is not.

Lots of fee simple interests are conveyed with encumbrances. That's a different animal than a life estate.

 

[Fred]

You just made THE best point, Mr. Hawkings.

I don't think it is funny and I don't think it is a compliment.

 

[Joyce Potts]

I don't think it is funny and I don't think it is a compliment.

Then I guess you're not as smart as I gave you credit for.