Leasehold Estate
Definition and meaning of Leasehold Estate in real estate.
A leasehold estate is an ownership interest in land or buildings that grants a tenant the right to occupy and use the property for a designated period. This estate is temporary and is established through a contract, contrasting with a freehold estate, which represents permanent ownership.
In more detail
Under a leasehold estate, the tenant possesses the property but does not own the underlying title, which remains with the landlord. The tenant has the right to quiet enjoyment, meaning they can use the property without unreasonable interference from the landlord or third parties. The four primary types of leasehold estates include an estate for years, a periodic tenancy, a tenancy at will, and a tenancy at sufferance.
This concept is vital for real estate agents and investors to understand, as the type of tenancy dictates how the lease can be terminated and what notice is required.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Also known as | Non-freehold estate, tenancy |
| Applies to | Residential and commercial rental arrangements |
| Watch out for | Landlord's reversionary right to take back the property |
A tenant holds a leasehold estate for years under an agreement to rent a house for exactly two years, with a set start date and a set end date.
Frequently asked questions
What are the four main types of leasehold estates?
The four main types are tenancy for years, periodic tenancy (month-to-month), tenancy at will (no set end date), and tenancy at sufferance (tenant stays past lease expiration).
Does a leasehold estate terminate when the property is sold?
No, in many states, a leasehold estate remains valid if the property is sold, meaning the new owner must honor the existing lease terms.