Fee simple is the most complete form of real property ownership, granting the owner full and unrestricted rights to use, occupy, sell, lease or transfer the property, subject only to government powers such as taxation, eminent domain and zoning regulations.
In appraisal practice, fee simple is the standard ownership interest in most residential transactions and the default basis for market value opinions. When a property is encumbered by a lease or other interest, the applicable interest shifts and the valuation must reflect that change accordingly.
Reviewers and loan originators should confirm that the interest being appraised matches the interest being conveyed — a mismatch can undermine both the value conclusion and the collateral assessment.