If you purchase an apartment in Florida, like a condominium or a rental apartment, the fact remains that you’ll have fee simple ownership of the real estate. The fee simple way of owning a condominium is by far the most common type of homeownership in the country. However, if you don’t own an apartment you’ll probably not be aware of what this form of ownership entails and what rights it grants. This article provides you with information on the different types of fee simple ownership in Florida and how it works.
What Is Fee Simple Ownership in Real Estate?
Fee simple ownership in real estate means that a homeowner has the full legal rights to the land and buildings including the property, and any structures built on it. The law recognizes fee simple ownership as the most common type of property ownership in Florida and other US states. If you own a property in fee simple, you can either sell it, leave it to an heir, or borrow against it.
Furthermore, individual unit owners in condominium units or apartments receive fee simple ownership. This grants them full legal rights subject to an agreement known as a deed restriction. Owners have common rights to use public areas and certain responsibilities for their upkeep. However, leasehold ownership in real estate provides a lessee with the right of entry and right of use. But there is no sale of a legal ownership interest to others.
Types of Fee Simple Ownership
Generally, fee simple ownership is classified into two types. These are fee simple absolute and fee simple defeasible ownership interests.
#1. Fee Simple Absolute
The term fee simple absolute refers to complete ownership of land with no restrictions. The ownership method allows the owners to do whatever they want with the land. They are only subject to liens, zoning taxes, local regulations, and criminal laws. Some zoning laws that may restrict the property owner include operating a retail store in a residential zone and failing to pay local property taxes.
#2. Fee Simple Defeasible
Fee simple defeasible is a type of property ownership that is subject to very specific conditions. if there is a violation in the grantor’s or a specified third party’s ownership conditions. The property may go back to the grantor or the third party. Some conditions may state that the property must always be for residential use. If you convert that property into a hotel or another type of business, you will be in violation of the deed covenant and may lose it. The property will then go back to its original owner.
There are three different types of fee simple defeasible they include:
- Subject to condition subsequent,
- Fee simple determinable,
- Subject to executory limitation.
If there is a violation in the conditions of the property ownership, each of the fee-simple defeasible will take a different set of results or actions. Here’s more information on the three types:
#1. Fee Simple Subject to Subsequent Conditions
In this case, the property does not automatically go back to the grantor If there is a violation in the conditions of property ownership. The grantor has the option to reclaim the property.
This option is known as the right of reentry. If the grantor does not take action in response to a violation of ownership conditions, the property remains with the party who violated the terms.
#2. Fee Simple Determinable
Fee simple determinable goes a step further in this regard. When there is a violation in the conditions in a fee simple subject to condition subsequent. The ownership of the property goes back to the grantor automatically. They don’t take further action against it.
#3. Fee Simple Subject to Executory Limitation
Fee simple subject to executory limitation is similar to simple determinable. If there is a violation of the conditions, ownership of the property will automatically move to a third party with no further action required. However, in fee simple determinable, it returns to the grantor.
Why Is It Called a Fee Simple?
Fee – A legal right to use land; often known as a fief. Simple – in the broadest sense: unlimited inheritance of heirs; unrestricted transfer of ownership.
Is Fee Simple a Good Thing?
In actuality, having a fee simple estate is advantageous in terms of property ownership. It means you are the sole owner of the property and no one else has any claim to it. Multiple sources identify it as the highest level of land ownership in common-law countries.
Fee Simple Ownership Florida
There are various types of deeds that can suit your needs in real estate transactions. If you want to conclude a real estate transaction in Florida, whether buying or selling. It is important to get familiar with various types of deeds in the state, as one type may be better than others
The ability to understand and appraise a recommended deed may mean the difference between a closed deal and a process fraught with delays and misunderstandings. However, hiring an expert to guide you through the transaction process is recommended.
Below are the different types of deeds used to transfer real estate transactions:
#1. General Warranty Deed
This is a legal document that guarantees the performance of a product In Florida real estate transactions, the most common type of deed is a Warranty Deed. When an owner signs a General Warranty Deed, he asserts that he is the current owner and has the right to transfer the property. Also, there will be no unknown liens or encumbrances as well as title defects that will interfere with the new owner’s ability to use the property.
Moreover, the seller agrees to protect the new owner from any damage that comes as a result of a title defect and to defend the buyer against any claims made by others against the property.
#2. Statutory Warranty Deed
The Florida statute created a statutory warranty deed. It gives the same five assertions as to the General Warranty Deed but is now a short-form version of the General Warranty Deed.
#3. Special Warranty Deed
A Special Warranty Deed transfers ownership to the new owner using the same five assertions as a General Warranty Deed. But the assertions are limited to the time that the owner held the title to the property. Instead of securing the property for all previous owners, the Special Warranty Deed only guarantees it for the time the current seller owned it.
There is a limitation in the current seller’s liability for the five covenants somewhere in the deed by specific language such as; “arise by, through, or under the Grantor, but no others.”
#4. Fee Simple Deed
A fee simple deed only transfers title to the new owner. The seller/grantor makes no warranties, covenants, or guarantees.
#5. Quit Claim Deed
A Quit Claim Deed makes no warranties and does not claim to transfer fee simple title. The intention of a Quit Claim Deed is to state that if you own an interest in the property. Hence, you are “quitting” your “claim” to the property. This entails that they are relinquishing any claim or interest they may have in the property. The deed is for resolving title issues.
#6. Life Estate Deeds
A Life Estate Deed transfers title to a person or persons when they are still alive. When the person or persons dies, the property passes in fee simple to another person. Life Estate Deeds are commonly used in estate planning.
#7. Personal Representative’s Deeds
A special deed is used when a personal representative (PR) transfers real property from an estate to an heir or a buyer. It is vital to identify the most appropriate deed type to convey the title. A General Warranty Deed is preferred by buyers because it provides the highest level of covenants and warranties from the seller. The most common deeds are the warranty deeds and the quitclaim deeds.
What Is the Difference Between Fee Simple and Freehold?
A fee simple defeasible is a type of freehold estate that imposes greater restrictions on the owner than a fee simple absolute. The ownership of this property is subject to certain conditions. For instance, you may be required to use the property for a particular function.
What Is the Opposite of Fee Simple?
Most individuals are only familiar with fee simple ownership, sometimes known as freehold. Leasehold is a different type of property ownership that exists in a few states. Both types of land tenure have significant differences that can have an impact on a property’s market value.
How Does Fee Simple Ownership Work in Florida?
One who owns a condominium with fee simple ownership in real estate can do whatever they want with their land and structures. Owners of fee simple property have specific rights that govern their relationship with their property. These rights include deeding, leasing and encumbrances.
#1. Deeding
A fee simple ownership in real estate can be deeded to others, with the owner acting as the grantor and the recipient as the grantee. These deeds can be to family members mostly through a revocable deed or to commercial buyers through a warranty deed.
#2. Leasing:
Having fee simple ownership of a condominium allows you to act as a lessor and rent it out to a lessee. It guarantees the lessee, also known as the tenant, use of the property in exchange for regular payments to the lessor (the property owner or landlord) for a specified period of time. If the terms of the lease are not followed, both the lessee and the lessor face consequences.
#3. Encumbrances:
Fee simple owners can borrow money against the value of their home, putting liens on the property. You can negotiate easements, or the right to access your property without owning it, as a fee simple owner. Such encumbrances can taint a property’s title. However, they are permitted in fee simple real estate ownership.
Furthermore, apartment buildings and condominium units, for example, tend to fall under fee simple ownership, but full use of the private land is subject to rules established by a communal governing body. For instance, a condo owner may own their condominium in fee simple ownership, but not the land underneath. In many cases, they do follow landscaping guidelines and pay the homeowner’s association fee.
Limitations of Fee Simple ownership in Florida
There is no limitation to the duration of fee simple ownership, and you can do pretty much whatever you want on the property; as long as you’re not breaking the law or otherwise endangering public welfare. However, you can decide to use the property, by selling it, renting it out, or leaving it to your heirs.
Although, there are other laws that can limit fee simple ownership. One of them is that you don’t have free will over your property, so you can’t murder someone in your basement with impunity. Others may still place liens on your property if you fail to pay property taxes or if a creditor obtains a judgment against you for the money you owe. Also, threats to ownership can arise regardless of how the title is held, but fee simple ownership provides the most protection.
Fee Simple Ownership FAQs
What limitations are placed on the rights of a fee simple absolute owner?
The fee-simple owner’s rights are limited by government powers of taxation, compulsory purchase, police power, and escheat. They are also limited by specific encumbrances or conditions in the deed.
Is a fee simple estate perpetual?
The fee simple absolute estate is a perpetual estate that is not constrained by specified or limited uses. It can also be freely transferred to heirs.
Is a 999 year lease a freehold?
No, a 999-year lease is not the same as a freehold or even a portion of a freehold. A long lease protects you from the biggest drawback of being a leasehold tenant. The lease expires and does not provide the benefits of owning the freehold.
Can you rent out a leasehold property?
Yes, you can. Subletting is when you rent out your leasehold property to someone else and charge them rent. If you sublet your property, your lease and the leaseholders’ rules and regulations require you to notify them within four weeks of the date you start to sublet{r, and escheat. They are also limited by specific encumbrances or conditions in the deed.
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