What Is A Leasehold Estate?
A leasehold estate refers to the temporary right given to a tenant by a landlord to use a property for some time in exchange for scheduled payments.
A leasehold estate is a lease that gives a tenant the possession of real property for an extended period. As a temporary owner of the property, the tenant may build permanent structures on it and make an income from it, depending on the agreement entered with the landlord.
Before a landlord confers temporary ownership rights to the tenant, both parties must enter a legally binding contract. The contract will outline the conditions under which the property may be occupied. This may include the duration of occupancy and what the tenant can or cannot do.
There are four different types of tenancy:
- Estate for years: This type of arrangement specifies what date the lease would begin and what date it would end. The duration does not necessarily have to last for years. At the end of the duration, the tenant would vacate the property unless they reach a new agreement with the landlord
- Periodic tenancy: This type of arrangement specifies what date the lease would begin but omits when it will end. The lease is automatically renewed at the end of a term, typically a month, unless a proper termination notice is given by either party.
- Estate at will: This type of arrangement has no term and no end. The tenant can occupy the property for as long as the landlord allows. Proper termination notice would be given when either party wants to pull out of the contract.
- Estate at sufferance: This is a situation where a tenant refuses to vacate a property at the end of a lease agreement. The landlord may seek legal action to evict the tenant from the property.
Leasehold Estate Example
Steve is a barber. He agrees with a landlord to lease a shop to serve as his saloon. The agreement specifies that Steve can use the shop for as long as he wishes on the condition that he pays rent every month. In this instance, because there is no end date for the lease, it is a periodic tenancy.« Back to Glossary Index