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Q – What’s The Difference Between Lease Hold and Fee Simple

A – Lease hold and fee simple are two of the most asked real estate questions.

So what’s the difference between the two?

First, leasehold. It’s a pretty common property ownership path here in Hawaii, but very uncommon most in the rest of the US.

Leasehold would be as if you own a piece of property, you own the building, the wood and the brick and the mortar, but the land underneath is owned by someone else. That’s why you lease the land but own the building. At the end of the lease, the owner has the right to say, “I want my land back. Take your building and go away. Now, obviously that doesn’t happen, but here in Hawaii there has been some laws they’re trying to pass to protect the lease hold owners.

But it’s not a bad process or way to own a property here in Maui, or Hawaii, for that matter. You just need to be prepared to know that at the end of the lease, the terms are going to change. You may lose the property, some properties are such great deal that becomes worthwhile.

There’s also properties that the ownership of the association buys the land from the property owner, then they give it up among the owners of the condominiums. Typically, it’s condominium leased property. It’s very common with commercial properties but not as common with residential properties.

When you hear fee simple, that’s just the way most properties are owned by people in the United States, when you own the house, you own the land underneath it, and it’s all one package.

If the lease is more than 30 years long it’s real estate. If it’s less than 30 years, it’s personal property.

Want to know more about lease hold and fee simple? Contact me.

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