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What does "fee simple interest" mean?

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FSB Conway

Thread Starter
Freshman Member
Joined
Nov 28, 2007
Professional Status
Banking/Mortgage Industry
State
Arkansas
I have just recently began reviewing appraisals for a real estate lender. One term that I see alot is "fee simple interest". What does this mean? I have also for the first time today seen the term leased fee Interest.

If someone could explain to me what these mean, that would be great.

Thanks!
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Physical land is not what is being transferred or exchanged. It's the rights that are conveyed, usually referred to as the "bundle of rights." The more "sticks in the bundle" the more you can do with the property. Fee simple is "all of the sticks."

You can learn more by reading texts such as The Appraisal of Real Estate published by the Appraisal Institute or you could also just google it with "definition fee simple" etc.
 

Michael Chu

Member
Joined
Feb 9, 2006
Professional Status
Certified Residential Appraiser
State
Georgia
Well, although I am not as experienced or knowledgeable as some of the regulars, I would like to suggest we lead this discussion with some definitions:

fee simple estate
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

leased fee interest
An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the lessee are specified by contract terms contained within the lease*.

*lease
A written contract in which the rights to use and occupy land or structures are transferred by the owner to another for a specified period of time in return for a specified rent.

Next you may see mention of Leaseholds or

leasehold interest
The interest held by the lessee (the tenant or renter) through a lease transferring the rights of use and occupancy for a stated term under certain conditions.

As you can see, according to the definitions the leashold (LH) and leased fee (LF) are partial interests while the fee simple is a whole.
 

Lawrence R.

Senior Member
Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
Someone has to say this so , let it be me.

I am strongly disturbed that you have been considered qualified to review appraisals for a lender and you are unfamiliar with that term.

It is like an EMT doing an M/M on a brain surgeon.

I am encouraged to see that you, personally, are conscientious enough to find out what knowledge you may be lacking that would make you better at your job.

Many of us are of the old fashoined notion that an appraiser is well qualified(and readily available) to review appraisals, while most others are not.

This is a prime example of the lending industry cutting corners even in the wake of what is going on.
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
Fee simple is "all of the sticks."
No it isn't. One cannot enjoy and excercise all the rights over all the real estate at the same time. You cannot sell and keep at the same time. You cannot enter and leave at the same time. You cannot use and lease at the same time.

Black's Law Dictionary defines fee simple, in part, as:
an estate limited absolutely to a person, his or her heirs and assigns forever without limitation or condition…Such an estate is unlimited as to duration, disposition, descendability.”

 

Joker

Elite Member
Joined
May 28, 2002
Professional Status
Certified General Appraiser
State
Ohio
FSB Conway, welcome to the forum. This is a great resource.

I am considering a career change. I am curious what qualifications are required to review of appraisals. In other words, what background or education do I need to get a job like yours?
 

icisic7

Senior Member
Joined
Jul 10, 2005
Professional Status
Licensed Appraiser
State
California
From the Appraisal Institute's The Dictionary of Real Estate Appraisal, 4th edition:

Fee Simple Estate - Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.
 

Smokehouse

Junior Member
Joined
May 7, 2003
Professional Status
Certified Residential Appraiser
State
Florida
What exactly do you do when you review these reports, are you just looking for spelling errors? If you are doing an actual review, what are your qualifications?
 

lizhorvath

Member
Joined
Dec 11, 2003
Professional Status
Licensed Appraiser
State
Michigan
No it isn't. One cannot enjoy and excercise all the rights over all the real estate at the same time. You cannot sell and keep at the same time. You cannot enter and leave at the same time. You cannot use and lease at the same time.

Black's Law Dictionary defines fee simple, in part, as:
an estate limited absolutely to a person, his or her heirs and assigns forever without limitation or condition…Such an estate is unlimited as to duration, disposition, descendability.”


I understand what Fee Simple is (and am equally appalled at the need for a reviewer to ask... This is Real Estate Appraisal ONE-OH-ONE stuff...) but I didn't interpret that "All of the sticks" to insinuate that you were using all of them at the same time. It just means that they are all available to you, the owner, and that none of the rights are restricted from your use at any given time should you so choose.
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
When you do a review, exactly what are you looking for given your apparent level of knowledge on the subject? I think this is why I stopped doing mortgage loan work about 20 years ago.
 
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