What is a leasehold estate?

What is a leasehold estate?

• A. An ownership in severalty.
• B. A lease that transfers full ownership.
• C. Tenant's right to occupy property for a defined term under a lease.
• D. A lien on the property.

Answer: (C)

A leasehold estate is the tenant’s right to occupy and use real estate for a defined period under a lease. This interest is possessory and contractual, created by the lease agreement, giving the tenant exclusive possession and use of the property during the term while the landlord retains ownership of the title. Because the tenant does not own the property and the interest ends when the term ends (or under the lease terms), this is a nonfreehold, or leasehold, estate. It differs from ownership in severalty, which is outright title to the property, and from a lien, which is simply a claim against the property rather than a possessory interest.

A leasehold estate is the tenant’s right to occupy and use real estate for a defined period under a lease. This interest is possessory and contractual, created by the lease agreement, giving the tenant exclusive possession and use of the property during the term while the landlord retains ownership of the title. Because the tenant does not own the property and the interest ends when the term ends (or under the lease terms), this is a nonfreehold, or leasehold, estate. It differs from ownership in severalty, which is outright title to the property, and from a lien, which is simply a claim against the property rather than a possessory interest.