IS IT REALLY REAL?
Ownership of real property is considered an integral part of the American Dream that almost everyone strives for. Having title to one’s own home allows a person to control his or her destiny and build equity for the future.
Under American Law, the type of real estate ownership that provides for the most rights is called Fee Simple Absolute or “Fee Simple”. This is because when property is owned in fee simple, it can be bought, sold, inherited, or owned for an infinite duration. Other than government regulations such as zoning laws, no party has the right to limit the lawful use of one’s fee simple real estate. Fee simple owners can permanently transfer their rights of ownership or even transfer partial rights of ownership at any time. For example, an owner can transfer a life estate (the right to use and occupy the property for life) to another individual, and still retain or sell the remainder interest in the property.
Property in fee simple can be owned by many different types of entities including: individuals, corporations, partnerships, LLCs, and Trusts. When more than one individual own fee simple real estate they must choose the type of ownership they want based upon their needs or desires. For instance, Tenants in Common Title means that if one party dies, their share goes to their heirs rather than the other owner. Yet, if two or more individuals own the property Jointly with Rights of Survivorship or “Jointly”, then if one party dies their share goes to the other party or parties. When two owners of real estate are married, their ownership is usually titled as Tenants by the Entirety or simply stated “as husband and wife”, in which case upon the death of one spouse the property will automatically go to the other spouse.
Fee simple real estate is typically considered in terms of vacant land with bricks and mortar, or in today’s construction methods as pressed board and sheetrock. But real estate can also consist of condominiums or “condos,” in which a person owns the inside of their unit, six inches inside the walls along with a portion of the common areas. It can also consist of a cooperative apartment, whereby one owns shares of stock in a corporation along with a long term lease of their specific apartment. Even a 2.5 foot-wide by 8 foot-long grave plot is considered real estate and can be owned in Fee Simple!
However, one can also own in fee simple mineral, water, or gas rights (the right to mine or drill) on a parcel of land. One can even own air rights in fee simple, which allow one to build up subject to zoning regulations. Without air rights, New York City would not be the metropolis full of sky scrapers that it is today. One can even own a share of stock in a Real Estate Investment Trust or (REIT), which in turn owns property in fee simple such as commercial office, buildings, or malls.
So when you are ready to jump into the real estate market think dirt, brick, air, mineral, oil or water, and choose wisely!
Rick S. Cowle is an attorney admitted to practice law in New York, Connecticut, The District of Columbia and The United States Supreme Court. He is president of The Law Office of Rick S. Cowle, PC a general practice law firm located at 18 Fair Street, Carmel, NY 10512, 845-225-3026, e-mail: RCowle [email protected] Comcast.net, Web Site: RCowleLaw.com
This article is meant for informational purposes only, and is not intended to create an attorney client relationship or to give legal advice.