When you hear a property is “freehold,” it is important to understand what it means when it is considered freehold.
Freehold property means the land or property is legally free from hold by any party other than the owner. The owner is the rightful owner of the property and can use or dispose of it.
Table of Contents
- The Meaning Of Freehold
- Freehold Estates – Fee Simple Estate Vs. Life Estate Explained
- Nonfreehold Estates
- Related Question
The Meaning Of Freehold
Freehold in property means land or property legally free from the hold of any entity other than the property owner. The owner of such a freehold has the right to use the property under the laws of where the freehold is located.
Freehold property is so important because a sale of a freehold property requires a lot less paperwork and hassle than a property that’s not freehold. You do not need to request authorization from the state to sell a freehold property.
Freehold property is usually more expensive to purchase than leasehold property. In freehold, the freehold is either Fee Simple Estate or Life Estate.
Freehold Owner’s Property Rights
For a freehold owner of a property, there are no restrictions on the owners’ rights to transfer or who can inherit the property. The freehold title can be transferred to another person without any limits.
When you purchase a freehold property, you own the property and land outright. This is called Freeland.
In other words, when you buy a freehold single-family dwelling home, you are also buying the land that the house sits on. If you buy an apartment, then the freehold apartment owner becomes a shareholder in the freehold property that the apartment sits on.
For a freehold house, you have the right to live in the house as long as you want, and you can also make any changes you want.
Advantages Of A Freehold Property
Freehold property means that you have complete freedom with your property. The property owner has complete control over the freehold premises and has no further payments to make. In other words, the owner owns the property outright.
The freehold owner has no restrictions on the time, visitors, or other aspects of the property that a leasehold property could have. The owner of a freehold property can do whatever he wants to on his property and not have to answer to anyone else.
For leasehold property, also known as non-freehold estate, the owner or lessor may have ground rents, service charges, and other changes they must pay along with the lease. Some leasehold properties will put stipulations on the leasehold for who can visit the property or what the owner can do on the property.
Freehold property is usually easier to sell as there is just one owner, so the owner can decide who they will sell their land to and at what price.
Bank loans and refinancing are much more manageable with a freehold property. And the land and capital appreciation are much more with freehold property than leasehold property.
Disadvantages of Freehold Property
The main disadvantage of freehold property is the cost; you will pay more for a freehold property than for a leasehold property. Also, as the freehold property owner will own all the land and what is on the ground, additional charges can incur or increase due to the land being freehold.
For a freehold property or unit, you need to pay a down payment to block the land or secure the purchase of the property.
Freehold Estates
There is also a real estate term known as freehold estates. A freehold estate is an estate that can exist for an indefinite duration or lifetime.
Freehold Estates can be defined as:
“The exclusive right to use and enjoy a parcel of land. Land is held for one of two ways, either Fee Simple or as a Life Estate.”
When we say land here, we mean the land can also include a building, residents, etc.
Some freehold estates are classified as “estates of inheritance,” The estate continues beyond the holder’s life and descends to the living heirs upon the death. How the inheritance occurs would be stated in a will or by law.
There are several types of these estates: fee simple estate or the defeasible estate that will continue indefinitely and is inherited by the owner’s beneficiaries. These estates are estates that will be passed down from generation to generation.
Another kind of freehold estate is “estates, not of inheritance,” also “life estates.” It will exist only for the term of a person’s life. The life estate will not continue and will terminate as soon as the person who holds the life estate dies.
Freehold Estates – Fee Simple Estate Vs. Life Estate Explained
Freehold estate is divided into two categories: simple and life estate. Even though there are some similarities, there are some differences between these freehold estates.
Fee Simple Estate
A fee simple estate is divided into two categories: simple defeasible and the fee simple absolute. Each of them is reviewed below:
Fee Simple Defeasible
This Freehold Estate under Fee Simple Defeasible has two basic clauses put on it as a freehold with conditional ownership that has a reverter clause and condition after the right of re-entry.
Fee Simple Absolute
As the name implies, a freehold is an absolute or unconditioned freehold.
Life Estates
Life Estates are for the individual’s lifetime who holds the life estate. The life estate is divided into ordinary life and Legal life estate. The two types of life estates are:
Ordinary Life Estate
The ordinary life estate has two types: Pur Autre Vie, which depends on another person, and conventional, which is a life estate dependent on the person receiving the estate.
Legal Life Estate
The legal life estate can be divided into dower, curtesy, and homestead.
Nonfreehold Estates
Nonfreehold estates are interested in real property less than a freehold estate. Nonfreehold estates are non-inheritable as they exist “without seisin,” which means no ownership, or the without seisin is without ownership.
A Nonfreehold estate is sometimes known as a leasehold estate, created through a lease or rental agreement. The agreement can be written or oral.
The Nonfreehold estate holder, also known as the tenant or lessee, holds no ownership of the real property. They can only use the property set forth by the lease or rental agreement terms.
As you can see, freehold is the highest form of property ownership. The person who owns a freehold property owns it free and can use the land or property in any way they choose. There are no restrictions placed upon them and how the property is used.
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Related Question
What Is An Example Of Appurtenance?
Appurtenance includes light fixtures, furnaces, air conditioners, barns, sheds, fences, and built-in swimming pools. Anything attached to the house or property and if it was removed because of damage to the property.
By clicking here, you can read more about What Is An Example Of Appurtenance?
What Is An Improvement Assessment in Property?
The improvement assessment is how your property’s improvements are assessed for tax purposes. Each county in the United States may have different rules for assessing property improvements, so you need to understand how your area will access the improvements you have made on the land.
By clicking here, you can read more about What Is An Improvement Assessment in Property?
