What is a leasehold estate?

A leasehold estate is defined as an interest in real property that lasts for a fixed period of time as defined by a lease. In this arrangement, the landlord (lessor) grants the tenant (lessee) the right to occupy and use the property for a specified duration, which can range from a few months to several years, depending on the terms of the lease agreement. This time-limited right to use the property distinguishes leasehold estates from freehold estates, where ownership is typically indeterminate and lasts indefinitely.

Understanding this concept is vital because it encompasses the legal rights and obligations of both parties involved in the leasing process. The tenant enjoys possession and use of the property while adhering to the terms laid out in the lease, such as paying rent and maintaining the property. Meanwhile, the landlord retains ownership of the property and has the right to reclaim it once the lease expires.

The other choices do not accurately define a leasehold estate. Ownership interest in a property refers to a freehold estate rather than a temporary arrangement. A temporary occupancy agreement could describe informal agreements, but it doesn’t specifically capture the legally binding nature of a leasehold estate defined by a lease. Lastly, a verbal agreement might occur between a tenant and a landlord, but lease