Leasehold or Fee simple?

[Mike Shapiro]

Looking for the simple answer here if possible.

I took an appraisal class a couple months ago and the instructor had mentioned if a property is rented out or leased the appraisal should be checked on the 1004 as leasehold and not fee simple. The room went silent with everyone pondering him...

Now I'm doing a single family investment property with a lease on the property until March and am curious if leasehold should be checked? I can't find a clear answer.

 

[Jerry Bone Jr]

Mike, is your assignment to appraise the Fee Simple value or the Leasehold value ?

 

[Brian Weaver]

To me, leasehold makes me think of Hawaii. You know, you buy a house but the land is held by someone else and you pay scads of rent for the dirt for say, 99 years.

Did your instructor mean leaseHOLD...or leased fee?

We have SOME leasehold stuff in Chicago...but not like Maui.

 

[Eli Weiss]

well, lets just make it short, and not confuse him........
he is looking for Fee Simple, just check off "tenant" occupied.

You will probably never in your life get a leasehold assignment.
Yes it's that rare.

 

[Joshua Fookes]

If the person owning the fee simple interest in the property has leased out the right of use and occupancy to another person, then they no longer have the whole "bundle of rights" or Fee Simple Interest. They now have a Leased Fee interest. They have leased the rights to someone else for a SPECIFIED TIME FRAME. Once that lease expires, they will then have the whole bundle of rights again and thus the Fee Simple interest would be reinstated. As long as the property is under a lease, the lessor CANNOT be said to have Fee Simple interest. It is Leased Fee. The lessee (rentor) owns the leased hold interest till the end of the lease.

It is considered to be Fee Simple if it is a month-to-month lease.

It sounds like you are appraising the Leased Fee interest in the property.

Josh

 

[Elliott]

Mike,
If you think your appraising a "leasehold", why not call the
lender and tell them your going to check "leasehold." Good
luck on finding comparables that are similar, recently sold,
and also have leases expiring in March.

Elliott

 

[erick anderson]

Looking for the simple answer here if possible.

I took an appraisal class a couple months ago and the instructor had mentioned if a property is rented out or leased the appraisal should be checked on the 1004 as leasehold and not fee simple. The room went silent with everyone pondering him...

Now I'm doing a single family investment property with a lease on the property until March and am curious if leasehold should be checked? I can't find a clear answer.

that instructor is a bonehead.

 

[The Warrior Monk]

I don't know what Fannie's rules are, because Fannie's rules don't always coincide with USPAP or common sense.

This question does bring up and highlight several important point, though. The owner, as of the date of value (unless prospective), does not own the property in fee simple estate, but rather holds the leased fee interest.

I doubt that any lender would want the leasehold interest appraised, because the remaining term of the lease is only three months. Unless we're talking about huge rent amounts, it is unlikely that the leasehold interest has any real value.

In the particular problem at hand, the owner will hold fee title in March. The owner will hold and could transfer fee title in about 90 days. A 90-day closing window is not unreasonable, so the leasehold is unlikely to affect value at all.

The one definite problem I see is that the property is not held in fee title as of the date of value, so a fee simple valuation of the property would require a hypothetical condition. Fannie won't like that!

I believe (but don't know as a fact) that "Leasehold" on a Fannie form is referring to situations where the land is leased by the owner, not where the owner has the leased fee.

 

[Fred]

Leasehold or Fee simple?
Looking for the simple answer here if possible.

To me the simplest answer is that it depnds on whether you are appraising the tenant's interest (leasehold) or the fee holder's interest (fee simple).

 

[Christine Marie]

Looking for the simple answer here if possible.

I took an appraisal class a couple months ago and the instructor had mentioned if a property is rented out or leased the appraisal should be checked on the 1004 as leasehold and not fee simple. The room went silent with everyone pondering him...

Now I'm doing a single family investment property with a lease on the property until March and am curious if leasehold should be checked? I can't find a clear answer.

mike, imo, you are not giving yourself enough credit for what you already know, and assuming you are doing this for the Owner...... ignore the bonehead....

Since one of the first steps in the appraisal process is to determine the type of interest that is held, i am under the same impression as the others who have posted, the interest is Fee Simple, the property is merely leased and or leased fee interest, at present [which would then present the concept of contract rent and market rent, and whether or not it [the rents] are positive or negative]...furthermore, what is to prevent owner occupancy after March....? to further question a question...

Incidently, we do have Leasehold here in Missipp, and i often have to check the box indicating thus.