The legal relationship between a person and a piece of real estate is called “property ownership.” Due to this relationship, the owner is granted specific duties and privileges concerning the property. For instance, the owner is free to utilize the property however they see fit as long as they don’t break any laws. The owner is also liable for the property’s upkeep and related taxes. Owning real estate can be a terrific method to accumulate wealth. It can also be a remarkable method to give your family a place to reside. In addition, you can rent out your property to others if you own it. You may have an additional stream of income as a result.
There are several varieties of property ownership, and each has benefits and drawbacks of its own. Take a look at some types of property ownership below;
Fee simple ownership
It is the most common type of ownership, giving the owner complete authority over the property. The owner can transfer ownership to heirs, sell, lease, or mortgage the property. The simple fee ownership drawback is that all taxes and upkeep expenses fall on the owner. For selling or leasing purposes, check these listings sites available around Nairobi to ease your search for buyers or tenants.
Leasehold ownership
In a leasehold ownership arrangement, the owner is granted exclusive use of the property for a predetermined tenure, usually 99 years. The lease can be renewed, but the owner does not have the same rights as a fee simple owner. In addition, the landowner can take the property back after the lease, a disadvantage of leasehold ownership.
Tenancy in common
This type of ownership involves two or more people having an undivided interest in the property. This implies that regardless of ownership stake, everyone has an equal right to use the property. When people want to co-own a piece of property, such as a holiday home, they frequently use tenancy in common.
Tenants by entirety
A married couple who jointly owns a property is said to be tenants by the entirety. Both spouses possess an equal share in the business that is regarded as one entity. Each spouse has an undivided stake in the property; neither spouse can sell or transfer that interest without the other spouse’s permission. If one spouse passes away or declares bankruptcy, this ownership helps protect the property.
Land trust
When real estate is owned through a land trust, the trustee holds title on behalf of one or more beneficiaries. For example, a person, a business, or even the trust itself might serve as the trustee. However, they do not have absolute ownership rights or the right to utilize the property. However, they can also avoid probate or maintain private property ownership. In addition, land trusts are frequently used to conserve land for conservation purposes.
Proprietorship Company
The Board of Directors, who the shareholders choose, runs the co-affairs. Operations being equally and severally accountable for the mortgage and any other debts incurred by the co-op is one of the main advantages of owning a co-op. As a result, the shareholders are not personally responsible for the corporation’s debts. It is customary for a cooperative corporation to be set up as a non-profit or not-for-profit corporation. Taxes on income are not applied to non-profit or not-for-profit corporations.
Understanding the legal, tax, and practical ramifications of the type of property ownership you are considering before engaging in a real estate asset contract is crucial. However, you should get assistance from a legal or real estate professional for extra counsel if you are unfamiliar with the specific ownership terms and conditions that interest you and your situation.
