Before you sell your home, it’s important to know what boxes you’ll have to check on your MLS listing. One of those boxes will ask you to identify your “real estate ownership”. This post will explain what real estate ownership is. It will also define both the most common types of ownership as well as a few less common types of ownership.
What is Real Estate Ownership?
The concept of real estate ownership is a simple one. Properties can be owned by one or more people or it can be owned by a another legal entity like a corporation or a school. So how does the type of ownership come into play?
The type of real estate ownership defines three main things:
- The owner’s legal rights and obligations
- What happens to a property if a bankruptcy occurs
- How a property can be transferred or inherited
Most Common Types of Ownership
Within the United States, the most common types of real estate ownership are “Fee Simple” and “Condominium.” There’s a good chance that you’ll be checking one of these two boxes when you build your MLS listing.
Refers to homeowners who own a freestanding house; this term implies that the homeowner is selling the entire home, as well as the land that exists beneath it.
Refers to those homeowners who own a condo (sometimes referred to as a unit) within a condominium building. In this case, the homeowner does not own the entire building, land or common areas. With condominium home ownership, the buyer purchases the unit in addition to an interest in the land and common areas, which will be shared with the other owners of the building.
Additional Types Of Real Estate Ownership
A co-op is defined as a multi-unit building where each resident owns a pre-defined interest in the building. Unlike a condominium, a resident does not own the unit that they occupy. Instead, they lease the unit from the owners who are typically known as or referred to as “shareholders.”
Planned Unit Development (PUD):
PUD refers to a housing development that is not subject to standard zoning requirements for the local area. Housing developers have to receive permission from the local government in order to obtain PUD status. The developer also has to establish guidelines for the building and its common areas, which can stipulate everything from the architectural style to the land coverage ratios and amenity requirements.
Generally speaking, land leases are a rare occurrence within the United States, however they can still be found in some rural areas. As the name suggests, when a resident owns a home on a land lease, they own the physical home, but leases the land that it stands upon.
Understanding different types of property ownership and what they mean will help you move seamlessly through the listing process.