Question

How can a leased fee estate have a value that could be transferred to another party?

Answer 1

Answer:

Based on different valuation methods to value such estate, the value can be transferred either from a lessee to another or from the lessor to the lessee

Explanation:

Leased Fee Estate

Leased Fee estate represent properties are owned per an individual given out as rent for a particular period of time. The owner of the estate is the lessor and the individual who is renting is the lessee. The lessee takes rent of the property for a period of time for a fee consideration.

It should be noted that while an estate would normally have unlimited or infinite life, a leased fee estate will always have a limited time/life.

Finally, in order to valuate the leased fee estate, the followng can be used

1. The Expected life of the estate based on depreciaton

2. The Nature of use of the estate

3. The period in which the estate will be leased for

4. The cost that will be saved by the owner from the lease.

Once the value is determined, then the value can be transferred either from a lessee to another or from the lessor to the lessee