Title - Fee, Leased-Fee, Leasehold Estate


Real property appraisals are completed, usually for banks or mortgage lenders as clients, based on the ownership interest held by a borrower.  A typical appraisal report is completed on a property held in fee, or with a 100% ownership interest in the property.  Other properties, however, are leased to one or several tenants.  In appraisal reports dealing with leased property, the appraisers considers a number of factors including but not limited to; the terms of the lease or leases, the rental rates (and whether or not they are equivalent to the economic or market rental rate), the net operating income, the discount rate (time value of money), the capitalization rates, vacancy, tenant turnover, the risk associated with the tenants and the value of the reversionary interest.  Direct capitalization and yield capitalization within the income approach are the methodologies generally employed by appraisers.


In some cases an appraisal is completed to consider the value of the tenant's interest established via a leasehold.  Some leasehold estates provide tenants with significant benefit due to their below market rental rate, while other tenants gain no leasehold advantage due to the fact that they are were negotiated at or adjusted to the market rate.


Appraisers also value partial interests or fractional interests in real property.  At times title to real property is held by a few or several owners, and valuing interests like 1/2, 1/3rd, 1/4th or 1/10th are a part of the appraisal problem.  Appraisers do not provide opinions with regard to the marketability of title.  Title opinions are provided by real estate attorneys who have reviewed the chain of title and title insurance is provided by a specialized insurance company.


The title held by an owner is generally assumed by an appraiser based on the best available information.  While current title insurance policy copies are generally requested verbally or in engagement letters, they are often not provided to the appraiser prior to or during the completion of the appraisal assignment.  Appraisers are not title insurance companies, and their reports do not guarantee that the ownership interest or interests reported to them by the County Assessor, County Treasurer or by reviewing the most recent conveyance deed are accurate.                  


Contact us with your questions or concerns regarding real property ownership / title, fractional interest ownership or regarding your specific appraisal assignment in Nevada at 1-702-568-6699.  We can also be e-mailed at grigdon@cox.net.  



Copyright 2007 Horizon Village Realty & Appraisal

Commercial Real Estate Appraisals in the Las Vegas & Henderson, Nevada Area.