Fee Simple
Fee simple is a form of ownership in real property. Specifically, it refers to an owner having full and irrevocable ownership of the land and any buildings on that land. Fee simple is the highest form of property ownership, and most real estate firms own real estate Fee Simple.
Putting ‘Fee Simple’ in Context
Greenfield Family Farms is a 1,200-acre farm located 60 miles outside of Des Moines, Iowa. The farm has been in the Greenfield family for over 100 years, passed down from generation to generation, with each new owner taking on full, fee simple ownership of the land. The current owner, Sarah Greenfield, recently inherited the farm from her father as part of an estate plan designed to maintain the property as a family asset.
As the fee simple owner, Sarah holds the highest possible form of ownership, meaning she has absolute rights to the land and any improvements made on it, including the farmhouse, barns, and irrigation systems. She can use, lease, or sell the property at her discretion, and she is also responsible for managing any taxes or liabilities related to the land.
The family’s goal is to continue operating the farm as a working agricultural business while also exploring ways to maximize the tax advantages that come with holding the property in fee simple. The property is integral to Sarah’s estate planning strategy, allowing her to pass it down to her children without relinquishing control or reducing its value. The land’s value has appreciated steadily over the decades, and as the sole owner, Sarah benefits from this long-term wealth preservation.
Since the property is owned in fee simple, Sarah is also considering leasing a portion of the land to a local renewable energy company to install solar panels, adding a supplemental income stream. Because she holds fee simple title, she has the authority to make this decision without needing approval from any other parties.
In this case, fee simple ownership ensures that the Greenfield family retains full control of the farm’s operations, land use, and future disposition, with the flexibility to optimize the property for both income generation and estate planning purposes.
Frequently Asked Questions about Fee Simple Ownership
What is Fee Simple ownership?
Fee simple is the highest form of property ownership, giving the owner full and irrevocable rights to the land and any improvements. It allows for complete control over use, sale, lease, or inheritance of the property.
What rights does a Fee Simple owner have?
A fee simple owner has absolute rights to use, lease, sell, gift, or transfer the property. As in the case of Sarah Greenfield, she can also enter into agreements, such as leasing land for solar panels, without needing approval from others.
How is Fee Simple different from Leasehold interest?
Fee simple means permanent ownership, while leasehold interest gives the right to use the land for a defined period. In leasehold, the land is owned by another party, and the lessee has limited rights.
Can Fee Simple ownership be inherited?
Yes. Fee simple property can be passed down through inheritance. In the example, Sarah Greenfield inherited the 1,200-acre farm from her father as part of the family’s estate plan.
What obligations come with Fee Simple ownership?
The owner is responsible for all liabilities, including property taxes, maintenance, and any legal compliance. Full control also means full responsibility.
Why is Fee Simple considered the most complete form of ownership?
It is considered most complete because it is not time-limited, subject to reversion, or encumbered by another party’s ownership interest. It includes full use and disposition rights with no conditions attached.
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