If you're selling a home, you'll want to know what kind of ownership you have over the property before you list it. If you're buying a home, you're going to want to know the types of real estate ownership there are before closing.
This post will explain the main types of real estate ownership and will also provide detailed definitions for additional, less common types of ownership.
Common Types of Real Estate Ownership
The two most common types of real estate ownership are "condominium" and "fee simple." Here are the specific definitions for each.
The seller owns the interior of a unit but shares an ownership interest in the land and common areas with other owners in the building.
In a condominium, you own the dwelling but not the land. Another entity owns the entire building and the land beneath it, while the condo owner retains the right to own or rent the property. The condo owner must also follow the rules and regulations set by the building owner.
This is a fancy way of saying the seller owns the entire home and the land beneath it. Most detached single-family homes are "fee simple" ownerships. Fee simple is also known as "sole ownership."
If you have a condo, you own the unit, but typically not the land beneath it. Condos are usually not fee simple properties, but townhomes can be.
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Additional Types of Real Estate Ownership
Now that you understand the difference between the two most common types of real estate ownership, let's take a look at a few definitions for additional real estate ownership types.
A cooperative (or "co-op") is a multi-unit building where each resident owns an interest in the building. Unlike a condo unit, the resident does not own the unit they occupy, rather they lease the unit from the cooperative.
Owners in a co-op are often referred to as "shareholders" and they own a stake in the entire building.
Residents pay rent for the ground upon which the home stands, instead of owning the land outright. Land leases are rare.
PUD stands for Planned Unit Development and describes a housing development that is not subject to standard zoning requirements for the area. With permission from the local government, a developer has established new guidelines for the building and common areas. These may include street lighting designs, street width standards, architectural styles, building height standards, land coverage ratios, common area park or amenity requirements.
Right to Use
The seller is selling the right to use a property, not to own it. A good example of a right to use type of real estate ownership is a timeshare. You have the right to use the property for a certain amount of time each year, but you don't own it. Other people can also have a right to use type of ownership on a single property.
Leasehold ownership simply means the leaseholder has the right to occupy the property but not sell it. Unlike renters, leasehold ownership can allow for renovations to the property.
Leasehold ownerships are more common in commercial real estate than residential, although they can be found in places where land is scarce (like Hawaii). Leasehold ownerships usually span years or decades, not months.
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