Did you know there are different types of land ownership? We’ll discuss each type below as well as where the distinction is found on a title commitment. Plus, we’ll highlight which type of ownership is best – Hint: it’s really simple! 😉
Whenever you’re buying a piece of property, it’s important that you check Schedule A on the title commitment which will generally say “the interest in this land is being conveyed as.” Generally speaking, it will say “fee simple” in that section. Fee simple is the strongest form of ownership or freehold ownership which grants you the most ownership rights. You can buy the property, you can sell the property, you can rent the property. So, fee simple ownership, also known as fee simple absolute, is the best type of ownership.
There are a couple other types of ownership such as fee simple defeasible. This means that the property you’re buying actually has some contingencies attached to it with in regards to what you can do to the property.
There’s also a leasehold ownership. This is common with condos, town homes, co-ops and it also used to be a very popular instrument back in New York in the ’60s, ’70s and ’80s when wealthy landowners – they didn’t want to completely sell their land – so they would actually lease their land typically with a 99-year land lease to folks that wanted to build skyscrapers.
So, we always recommend that you get fee simple ownership. Always consult with your attorney, of course. And, interestingly, the word fee is actually derived from fief which is a feudal land holding which originated back in England between a tenant and an overlord.
Feel free to reach out to us with questions or other topics you’d like to see covered.
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