A less than freehold estate (also known as a leasehold estate) is an estate held by one who rents or leases property. The key difference between a leasehold estate and a freehold estate is the limitation of time. As lease is a legal estate, leasehold estate can be bought and sold on the open market.
There are four main types of leasehold estates, each having specific characteristics as to the lease period and the relationship between the landlord and tenant.
- Fixed term tenancy or estate for years
- Periodic tenancy
- Estate at will
- Estate at sufferance
1. Fixed Term Tenancy or 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. No notice to be terminated is needed as the end of the lease is established at the conception of the rental.
2. Periodic Tenancy
A periodic tenancy 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. A Periodic tenancy can be for weeks, months, years, or more. 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.
3. Estate at Will
An estate at will means that it can be ended at any time. Kinda scary, right? The estate continues as long as the owner gives the tenant permission to occupy the property. The term of this estate is indefinite. It’s also important to note that not all states recognize an estate at will, and ones that do vary in laws.
4. Estate at Sufferance
An estate in sufferance arises when the tenant holds over after the expiration of their term. An estate at sufferance differs from the previous three as it refers to a person in possession of the property with permission from the owner. Another way to put it is it’s a tenant who lawfully comes into possession of a landlord’s real estate but who continues to occupy the premises improperly after his or her lease rights have expired.
For more, check out our article on freehold estates.