Leasehold Estate

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A leasehold estate pertains to a lease in which the renter has the right to possess the leased property for a specific extended period of time. The lease that is signed by both the property owner and the tenant outlines the rights and obligations of both parties, giving the tenant temporary ownership-like rights to the property in question. A leasehold agreement is a binding legal contract. To explore this concept, consider the following leasehold estate definition.

Definition of Leasehold

Noun

  1. Property acquired under a lease

Origin

Early 18th century   Middle English lease + hold

Types of Leasehold Estate

There are four main types of leasehold estate, each having specific characteristics as to the lease period and the relationship between the landlord and tenant. The four types are (1) estate for years, (2) estate from period to period, (3) estate at will, and (4) estate at sufferance.

What is a Leasehold Estate for Years

The term “estate for years” refers to an estate that has a specific duration of time as defined in the lease agreement. The duration does not have to be years, but may specify weeks, days, or months. This type of leasehold specifies clear starting and ending dates, and when the end date comes about, the tenant must vacate the property and return it to the owner unless a new leasehold agreement is entered into. Neither party is required to give notice at the end of such a lease, as it is recognized that they are aware of the dates specified in the agreement.

What is a Leasehold Estate from Period to Period

An “estate from period to period” is a leasehold agreement that specifies an initial period of tenancy and the length of the agreement, but does not end after the specified period. This type of leasehold agreement renews automatically at the end of the term unless either party gives notice that they plan to terminate the lease. Some jurisdictions require the landlord or tenant to give 30 to 60 days’ notice of such intent.

What is a Leasehold Estate at Will

An “estate at will” has no end date and no initial period of tenancy defined in the agreement. The estate continues as long as the owner gives the tenant permission to occupy the property. If either party terminates the lease, they must give notice according to the lease laws in their state. Not all states recognize an estate at will.

What is a Leasehold Estate at Sufferance

An “estate at sufferance” differs from the previous three greatly as it refers to a person in possession of the property with permission from the owner. This type of leasehold estate is created when a tenant is allowed to remain on the property after the lease has expired until such time as the landlord asks them to vacate.

Duties of a Landlord

The landlord in a leasehold estate has specific duties including putting the tenant in legal possession of the property. The landlord must also ensure the premises is in habitable condition if the lease pertains to a home or commercial building. Leasehold estates may pertain to land, which may be leased for such purposes as planting crops, grazing livestock, or holding a public event.

The landlord is also obligated to provide the tenant with quiet enjoyment of the property, which may be violated in one of three ways:

  1. Attempting to evict the tenant by direct invasion
  2. Preventing the tenant from accessing all or part of the leased property
  3. Leasing part of the property to another person so that the tenant does not have full access to the property

If the landlord does not fulfill his duties, the tenant may have the right to legally terminate the lease. Alternatively, the tenant may elect to remain in possession of the property, continue paying rent, and sue the landlord in civil court.

Duties of a Tenant

Just as the landlord has duties in a leasehold estate, the tenant is also bound to specific requirements:

  1. Pay the agreed upon amount of rent when it is due
  2. Avoid causing damage to the property

Related Legal Terms and Issues

  • Civil Court – A court hearing non-criminal cases.
  • Implied Warrant of Habitability – An obligation of a landlord to ensure the property is suitable for living. This includes such issues as ensuring the property has running water, heat during the winter, and doors that lock.
  • Lease – A contract made between two parties in which one party, the landlord or owner, coveys land or property to another party, the tenant, for a specified amount of time.
  • Landlord – A person who rents or leases land or property to another person.
  • Tenant – A person who occupies or rents property from another person.
  • Terminate – To bring a lease, contract, or other agreement to an end.