Page 7 - Hawaii Top Flyers

Leasehold vs.

Fee Ownership

Fee simple ownership is probably the most familiar form of
property ownership to buyers of residential property, especially
on the US Mainland. Fee simple is sometimes called fee simple
What Is absolute because it is the most complete form of ownership.
Fee Simple A fee simple buyer acquires ownership of the entire property,
including both the land and buildings. The fee simple owner
Ownership? does not pay ground rent, but does pay maintenance fees
and real property taxes. The fee simple owner has the right to
possess, use the land and dispose of the land as they wish - sell
it, give it away, trade it for other things, lease it to others, or pass
it to others upon death.

A leasehold interest is created when a fee simple landowner enters into an agreement or contract called a ground lease
with a lessee. A lessee buys leasehold rights much as one buys fee simple rights; however, the leasehold interest differs
from the fee simple interest in several important respects. First, the buyer of residential leasehold property does not own
What Is the land and must pay ground rent. Second, his use of the land is limited to the remaining years covered by the lease.
Leasehold Thereafter, the land returns to the lessor, and is called reversion. Depending on the provisions of any surrender clause in
the lease, the buildings and other improvements on the land may also revert to the lessor. Finally, the use, maintenance,
Ownership? and alteration of the leased premises are subject to any restrictions contained in the lease.

Conversion of leasehold property to fee simple ownership involves purchasing the landowner’s remaining interest, called
the leased fee interest. The lessors of many, if not most, leasehold properties are currently offering to sell their leased fee
interests to their lessees or prospective buyers of a leasehold property.

The ownership of a leasehold property is
divided into two portions: the leased fee
interest which is owned by the lessor and
What Is the leasehold interest which is purchased
Leased Fee and owned by the lessee. The leased fee

Interest? interest refers to those rights retained by
the landowner of the leased land which
include the right to receive rent (an income
stream) and the right to get the land back at
the end of the lease (reversion).

Source: https://www.hicentral.com/consumer-info-property-type.php

08/2021| © 2021 Old Republic Title | OR2177-DI-HI | Old Republic Title is providing
this information as a free client service and makes no warranties or
representations as to its accuracy.
Old Republic Title strongly recommends consumers confer with their title insurer
as underwriting requirements vary among companies and further, obtain guidance
and advice from qualified professionals, including attorneys specializing in
Real Property, Trusts and/or Title Insurance to get more detailed, and current,
information as to any particular situation affecting them.