What distinguishes fee simple interest from leasehold interest?

Fee simple interest is recognized as the highest form of property ownership because it grants the owner complete control over the property, including the rights to sell, lease, or develop it without any time constraints or limitations imposed by others. This ownership is inherently permanent, meaning that it does not expire after a certain period. In contrast, leasehold interest is a temporary arrangement where the lessee is granted the right to use and occupy the property for a specific period, as defined by the lease agreement. Once the lease term ends, the rights to the property revert back to the lessor, highlighting the temporary nature of leasehold interest.

The distinction between these two types of interests is significant in real estate, as fee simple ownership provides the full spectrum of ownership rights, while leasehold limits the rights of the lessee to what is stated in the lease. Understanding this difference is crucial for appraisers, property owners, and investors when evaluating property value, potential uses, and investment opportunities.