What is a leasehold estate?

A leasehold estate is an ownership interest in land in which a tenant has the right to occupy or use a real property (either land or building) for a given fixed period of time.

Residential lease

Residential lease

Under this agreement, the tenant has the right of possession, but not the ownership of the property. When the term of the leasehold comes to an end, the possessory interest to the property reverts back to its owner.

Leasehold estates can be classified into the following types:

a) Fixed-term tenancy, also known as tenancy for years, is a possessory interest that lasts for some fixed period of time. The duration of the tenancy can be defined by setting a specific date of the contract’s termination or by specifying a possible event in which the tenant may give up tenancy to the landlord.

b) Periodic tenancy or estate from period to period is an interest in property, in which the date of termination of the tenant’s possessory interest to a property is not specifically defined. Instead, the tenant’s right to occupy the property is determined by the term of the payment of rental, which can be week-to-week, month-to-month, or year-to-year. Under this agreement, the property owner has the right to terminate the lease any time with a month’s notice to vacate.

c) Tenancy at will is an unstructured lease agreement, in which the ending date and the period of tenancy is not specified. This means that the tenant can occupy the property as long as he likes. The tenant also has the right to terminate his tenancy at any given time. The same goes for the landlord; the landlord also has the right to end the tenancy any time by giving a reasonable notice.

However, in a residential lease, tenancy at will does not automatically provide the landlord the right to terminate the lease if the tenant still desires to live on the property. The landlord can only terminate the tenancy by operation of law with consideration to any of the following instances:

death of either the tenant or the landlord
the property is leased to another person
the landlord transfers his interest in the property to another person
the tenant did something that destroys or damages the value of the property, and
the tenant transfers his possessory right to the property to another person.