When looking for condos, townhomes, and apartments for rent on Guam, you sometimes come across the term “leasehold” or “fee simple”. Ever wonder what it means or if it matters to you as a renter on Guam? When you see the 2, you would probably think that as a renter you want a leasehold rental, it has the word “lease” in it and sounds appropriate, right? Well, for a renter in most cases it really does not matter whether it is a leasehold or a fee simple rental.
Leasehold and fee simple pertains to the land that the condo, apartment, or townhome is built on. On Guam there are a couple of different ways a person or entity takes ownership of land, but the most common way is leasehold and fee simple. Leasehold land is most common in the Tumon Area, but there are also fee simple properties next to leasehold properties as well in the area. And Leasehold land can be anywhere.
Basically a leasehold property is a long term lease on land. Long term leases are commonly 50~100 year leases. So in terms of a condo, townhome, or apartment building, the owners of the building are leasing the land from the land owner for a long period of time. In many cases, these leasehold land are renewable and are renewed for additional years.
As for a fee simple property, it is a property that is owned outright by the owner(s) of the condo, townhome, or apartment building. Fee simple is the highest form of real estate property ownership in most places. Not to scare you or anything, but even with the highest form of ownership of real estate, there are some limitations by government powers. Even though it is not a common occurrence, taxation, eminent domain, police power, and escheat are some limitation of ownership in any terms.
So to sum it up, if you are renting a condo, apartment, or townhome, the ownership of status of the land, whether it be fee simple or leasehold should have no major effect on your lease. That’s unless you plan to rent for a really long period of time. Now on the other hand, as a renter, if you are considering to purchase the place you are living in after or during the term of the lease, you should to take into consideration, the ownership of the property on Guam.