On Okaloosa Island, Two Identical Condos Can Sit on Different Kinds of Ground

On January 20, 2026, Okaloosa County Public Works sent the Board of County Commissioners a short request. It covered two single-family lots, one on Dorado Drive on the island and one in Neptune's Retreat in Destin, along with one condominium unit: Apartment No. 350 of El Matador, at 909 Santa Rosa Boulevard in Fort Walton Beach. Staff wrote that all required paperwork had been received and verified, and they recommended that the board sign quitclaim deeds releasing the county's reversionary interest in each property.

The request named one unit in El Matador. It did not cover the whole building. That detail is the main thing to understand about property title on Okaloosa Island. Much of the land started out as county leasehold. It changes to fee simple one owner at a time, when that owner applies, so two matching units in the same building can sit on different kinds of ground. The building name tells a buyer nothing about which kind a given unit has.

A Ground Lease Built to Be Undone One Parcel at a Time

Island land was first managed by the Okaloosa Island Authority, which the Okaloosa Island Leaseholders Association says was created in 1953. The Authority leased land rather than selling it. The association describes the original leases as 99 years with an automatic 99-year renewal. According to the association's history of the island, the original federal conveyance limited the land to public recreation. Federal legislation in 1962 removed those restrictions except for a 75-foot aerial easement, and a quitclaim deed followed in 1963.

The Authority itself is gone. Okaloosa County's recorded island covenants say it was abolished in 1975 and its assets and management moved to the Board of County Commissioners. The same covenants date a county policy allowing leases to be exchanged for title to 1992. The leaseholders' association dates the commission's permission for fee-simple titles to 1995.

From the beginning, conversion was something each owner chose to do. The county did not convert the island all at once. It opened a door, and every leaseholder decides whether to use it. On August 1, 2017, the board adopted a resolution setting out the staff procedure that still governs these requests. A 2021 U.S. Army Corps of Engineers real estate plan for the county's coastal storm risk project identifies it as Resolution No. 17-123. That plan describes the procedure as available to anyone who can show a 100 percent leasehold interest under the original 99-year lease.

2026 on the County Agenda

The program is still running. Okaloosa County's public meeting portal shows conversion requests throughout 2026, and condo units come up regularly next to beach-cottage lots. The program covers Okaloosa Island and Holiday Isle in Destin, so several of these addresses are across the pass.

Another spring 2026 item, with attachments dated May 11, covered several more Santa Rosa Island lots and parcels. Each request uses the same standard language. Staff says the documents were received and verified and recommends approval of the quitclaim deeds and an authorizing resolution. The agenda records reviewed here show what came before the board. They do not include the minutes recording each vote.

Two things stand out in the table. First, condo owners are converting their own units without waiting for their buildings. El Matador, The Islander Phase II, Clipper Cove and Holiday Surf & Racquet Club each appear through a single apartment or unit number. Second, the numbers are small. A few properties go through at a time, a few times a year. If the island's leasehold history ever disappears completely, it will happen slowly, one deed at a time.

What the $500 Covers, and What It Doesn't

The county's current leasehold conversion application asks the board for a quitclaim deed to the county's reversionary interest in a specific leasehold parcel. The application packet has four parts:

1. A copy of the current lease assignment for the parcel.
2. A certificate from the Okaloosa County Tax Collector showing that all taxes and assessments on the parcel have been paid for the past five years.
3. An Owners and Encumbrance Report or Property Information Report from a Florida title company, showing that the applicants hold 100 percent of the leasehold interest.
4. A nonrefundable $500 application fee payable to Okaloosa County.

The $500 covers the county's side of the work: preparing the documents, staff review, legal notices, the resolution, and preparing and recording the quitclaim deed. The title search and examination, the title report, and the Tax Collector's certificate are separate costs, and the applicant pays them.

The application also sets limits on who can file. Each parcel needs its own application, and every leaseholder named in the current recorded assignment has to sign. The county will not accept an application if the original lease from the Okaloosa Island Authority or the county has no option for further renewals. It will not send an application to the board unless the title company certifies 100 percent ownership. The application also says this about what the deed itself means:

"Applicant understands that the County, in issuing any quit claim deed to the applicant, makes no warranty of title whatsoever regarding the property, either express or implied, and makes no representation of facts concerning the condition of title."

That quote explains what conversion does and doesn't do. The county releases its reversionary interest. It does not promise that the rest of the title is clean. In a sale, title examination and title insurance stay with the parties and their title company, as they would anywhere else.

Where a Lender's File Meets the Lease

Leasehold status can affect financing. The leaseholders' association says most lending institutions don't want to lend on leased property, for a new mortgage or a refinance. It adds that this can cause problems for borrowers working with a non-local mortgage company. That statement comes from an undated association page. It reflects the association's experience and is not a published lending rule.

The published rules show what a lender's file actually tests. Freddie Mac's Guide Section 5704.1 says Freddie Mac will buy mortgages secured by leasehold estates where the market has shown acceptance of that kind of ownership, and condominium units are an eligible property type. The section sets several conditions:

• The leasehold and improvements must count as real property and be covered by compliant title insurance.
• The lease must be recorded, in full force and effect, and enforceable against the lessor.
• The leasehold must run at least five years past the mortgage's maturity date, unless fee simple title vests earlier.
• Rent, taxes, insurance and other charges must be current, with no default claimed.
• The lease must allow assignment and mortgaging, require written notice of default to the lender within 30 days, give the lender a right to cure, and not allow forfeiture for a non-monetary default.

Set those conditions next to an island lease that runs 99 years with a 99-year renewal, and the questions in a transaction become specific. Is the lease recorded and in force? Does its remaining term, renewal included, clear the loan by five years? Does it contain the mortgagee-protection language the guide requires? A unit that has already been converted to fee simple doesn't raise those leasehold questions. That is the practical difference between two otherwise identical units in the same building.

Reading a Listing on Okaloosa Island

A listing's address, building name and view won't tell you which kind of title a unit has. The recorded documents will. The 2026 agenda requests name a lot, block or unit and point to a quitclaim deed and resolution prepared for that specific parcel. A converted unit has a county quitclaim in its chain of title. An unconverted unit still runs through a lease assignment.

Timing is part of this too. Only the current leaseholders can apply, and only with a title report showing they hold 100 percent of the interest. Applications go to Okaloosa County Public Works, and staff then bring them to the board.

Beach projects add one more layer. The Army Corps real estate plan says these leasehold interests may need review during the sponsor's title work so that perpetual beach storm damage reduction easements are not undermined. For a gulf-front owner, the lease can come up in title work that has nothing to do with a sale.

FAQ

Is all of Okaloosa Island still leasehold?

No. Conversions to fee simple have been possible since the 1990s, and 2026 agendas show more of them coming before the board. No public count of how many parcels remain leasehold turned up in the county records reviewed for this post.

Does Holiday Isle in Destin work the same way?

The county's application and agenda requests treat Okaloosa Island and Holiday Isle leaseholds under the same procedure. The Islander Phase II and Holiday Surf & Racquet Club units in the table are Holiday Isle addresses.

Isn't there a Florida Supreme Court case on leasehold taxes?

Accardo v. Brown, decided March 20, 2014, dealt with Navarre Beach leaseholds in Santa Rosa County. It held that those taxpayers were equitable owners subject to ad valorem taxation. It was not a ruling on Okaloosa Island. Questions about how a specific Okaloosa parcel is assessed are best taken to the Okaloosa County Property Appraiser.

Does the county charge annual ground rent?

The county records reviewed here don't publish an island-wide rent schedule. A specific property's lease assignment and title report show its terms.

On Okaloosa Island, which kind of ground a unit sits on can change the paperwork in a sale. Sold in Paradise can pull the chain of title on any island or Holiday Isle unit you're considering and walk you through what its lease or quitclaim record shows before you make an offer. Find Your Slice of Paradise and book a free 30A market consultation.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.