Definition
Fee Ownership
In real estate, the term “fee” refers to different types of ownership interests in land or property. These ownership interests are typically inheritable and can be categorized mainly into:
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Fee Simple: The most complete ownership interest one can have in land. It is unconditional and provides the owner all rights to the property, including possession, control, modification, leasing, selling, and inheriting.
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Fee Simple Defeasible: An interest in land that is conditional and can be voided if certain conditions are not met. These conditions are specified in the deed. If violated, the ownership reverts to the grantor or their heirs.
Fee Compensation
Additionally, a “fee” can also refer to compensation paid for services rendered. This type of fee is typically performance-based and is paid upon the successful completion of a specific task.
Example: When Susan completed the appraisal report of the shopping center and it was accepted by the project manager, she earned a $6,000 fee.
Examples
Fee Simple Example
John inherits a piece of land from his grandfather. The land is granted to him in fee simple which means he has the highest level of ownership interest. He can use the land as he pleases and has the right to pass it on to his heirs.
Fee Simple Defeasible Example
Mary receives a piece of farmland on the condition that it is only used for agricultural purposes. If Mary decides to develop it for residential housing instead, her ownership may be terminated, and the land could revert to the original owner or their heirs.
Fee Compensation Example
A development company hires an appraiser to evaluate the financial value of a new shopping center. Upon completion and approval of the appraisal report, the appraiser receives a $6,000 fee from the development company.
Frequently Asked Questions (FAQs)
What is a fee simple estate?
A fee simple estate is an unrestricted, inheritable form of property ownership. It represents the greatest interest one can have in land.
Can a fee simple estate be inherited?
Yes, a fee simple estate can be inherited. It can be passed to heirs through a will or by laws of intestate succession.
What conditions might be specified in a fee simple defeasible estate?
Conditions might include using the property for a specific purpose, like education or agriculture. Violation of these conditions can result in the loss of property ownership.
How is a fee for services like appraisals determined?
Fees for services such as appraisals are often determined based on the complexity of the task and market rates. They are usually agreed upon in advance in a contract.
What differentiates fee simple from leasehold?
Fee simple refers to full ownership of property. Leasehold, on the other hand, involves renting property for a certain period while the landlord retains some rights.
Related Terms with Definitions
- Leasehold Estate: An interest in land for a fixed period under a lease agreement.
- Life Estate: An interest in land that lasts for the duration of an individual’s life.
- Easement: A non-possessory right to use another person’s land for a specified purpose.
- Appraisal: An unbiased professional opinion of a property’s value.
- Deed: A legal document that grants ownership of property from one party to another.
Online Resources
- Real Estate License Exam Study Guide
- National Association of Realtors
- Investopedia Real Estate Section
References
- Millgrove, N. (2020). Introduction to Real Estate Principles. Real Estate Institute Press.
- Ratter, D.M. (2018). The Essentials of Real Estate Law. Pinnacle Publishing.
Suggested Books for Further Studies
- Bronchick, W., & Dahlstrom, R. (2001). The Real Estate Investor’s Handbook: The Complete Guide for the Individual Investor. Adams Media.
- Reilly, M., & Satterfield, N. (2010). Modern Real Estate Practice. Kaplan Publishing.
- Berges, S. (2006). The Complete Guide to Flipping Properties. Wiley Publishing.
