A leasehold estate or a leasehold interest is an ownership of a temporary right to hold land or property in which a lessee or a tenant has rights of real property by some form of title from a lessor or landlord. Although a tenant does hold rights to real property, a leasehold estate is typically considered personal property. Leasehold is a form of land tenure or property tenure where one party buys the right to occupy land or a building for a given time. As a lease is a legal estate, leasehold estate can be bought and sold on the open market. A leasehold thus differs from a freehold or fee simple where the ownership of a property is purchased outright and after that held for an indeterminate length of time, and also differs from a tenancy where a property is let (rented) periodically such as weekly or monthly. Terminology and types of leasehold vary from country to country. Sometimes, but not always, a residential tenancy under a lease agreement is colloquially known as renting. The leaseholder can remain in occupation for a fixed period, measured in months or years. Terms of the agreement are contained in a lease, which has elements of contract and property law intertwined.
History
Laws governing landlord–tenant relationships can be found as far back as the Code of Hammurabi. However, the common law of the landlord-tenant relationship evolved in England during the Middle Ages. That law still retains many archaic terms and principles pertinent to a feudal social order and an agrarian economy, where land was the primary economic asset and ownership of land was the primary source of rank and status. The tenancy was essential to the feudal hierarchy after the statute Quia Emptores prohibited subinfeudation (the creation of new feudal estates by existing feudal landholders) in the late 13th century; a lord would own land, and the tenants became vassals. Leasehold estates can still be Crown land today. For example, in the Australian Capital Territory, all private land "ownerships" are leaseholds of Crown land.
Terminology A distinction may be made between a residential tenancy, offering a person a place to live, and a business tenancy, where premises are occupied for business purposes. There may be different statutory provisions for residential and business tenancies, for example in the UK's Landlord and Tenant Act 1954, Part I (now largely superseded) dealt with residential tenancies and Part II dealt with business tenancies.
Fixed-term tenancy or tenancy for years A "fixed-term tenancy" or tenancy for years lasts for some fixed period of time. Despite the name, such a tenancy can last for any period of time – even a tenancy for one week would be called a tenancy for years. In common law, the duration did not need to be certain, but could be conditioned upon the happening of some event (e.g. "until the crops are ready for harvest", "until the war is over"). This is now disfavored, and some jurisdictions have made fixed durations a requirement.
Termination or expiration The tenancy will end automatically when the fixed term runs out or in the case of a tenancy that ends on the happening of an event when the event occurs. It is also possible for a tenant to give up the tenancy to the landlord, either expressly or implicitly. This process is known as a surrender of the lease. A tenancy may end when and if the tenant accepts a buyout agreement from their landlord. The landlord can offer to repurchase the property from their tenant as long as both parties agree upon the price (as with any other consideration, this need neither be market-rate, nor indeed monetary at all). Depending on the laws in force in a particular jurisdiction, different circumstances may legally arise where a tenant remains in possession of property after the expiration of a lease.
Periodic tenancy A periodic tenancy, also known as a tenancy from year to year, month to month, or week to week, is an estate that exists for some period of time determined by the term of the payment of rent. An oral lease for a tenancy of years that violates the statute of frauds (by committing to a lease of more than—depending on the jurisdiction—one year without being in writing) may create a periodic tenancy, the construed term being dependent on the laws of the jurisdiction where the leased premises are located. In many jurisdictions the "default" tenancy, where the parties have not explicitly specified a different arrangement, and where none is presumed under local or business custom, is the month-to-month tenancy.
Tenancy at will A tenancy at will or estate at will is a leasehold such that either the landlord or the tenant may terminate the tenancy at any time by giving reasonable notice. It usually occurs in the absence of a lease, or where the tenancy is not for consideration. Under the modern common law, tenancy at will can arise under the following circumstances:
the parties expressly agree that the tenancy is at will and not for rent. a family member is allowed to live at home without formal arrangement. A nominal consideration may be required. a tenant wishes to occupy the property urgently, but there was insufficient time to negotiate and execute a lease. The tenancy at will terminates in this case as soon as a written lease is completed. The tenant must vacate the property if a lease fails to be realized. In a residential lease for consideration, a tenant may not be removed except for cause, even in the absence of a written lease. If a landlord can terminate the tenancy at will, a tenant by operation of law is also granted a reciprocal right to terminate at will. However, a lease that expressly continues at the will of the tenant ("for as long as the tenant desires to live on this land") does not automatically provide the landlord with a reciprocal right to terminate, even for cause. Rather, such language may be construed to convey to the tenant a life estate or even a fee simple. A tenancy at will terminates by operation of law, if:
the tenant commits waste against the property; the tenant attempts to assign his tenancy; the landlord transfers his interest in the property; the landlord leases the property to another person; the tenant or the landlord dies.
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