Conversely, suppose the market rent is found to be greater or less than the contract rent. Market value label should be leased fee estate for technical accuracy and consistency with appraisal industry standards and practice. Therefore, the leased fee estate value is equal to the fee simple estate, but the property rights are appraised. In the development and analysis for the Income Approach to Value, an appraiser may find that the lease terms align with current market conditions. Based upon the definitions from the Dictionary of Real Estate Appraisal (below), anytime the subject is encumbered by a lease, including a partial lease, a short-term lease on a single-family residence, a ground lease, or a billboard lease, the leased fee property rights must be valued. Dart Appraisal’s team of reviewers often encounters what appears to be a common misunderstanding about which portion of an estate should be valued when a client or intended user request an appraisal report: The Fee Simple Estate or the Leased Fee Estate.
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