A leasehold estate is the legal interest a tenant holds in property under a lease: the right to possess and use it for a period, while ownership stays with the landlord. The landlord keeps what is called the reversion, meaning the property comes back to them when the leasehold ends.
The term comes from property law, which divides interests in land into freehold estates (ownership with no fixed end) and non-freehold, or leasehold, estates (possession for a limited time).
The four types of leasehold estate
| Type | How long it lasts | How it ends |
|---|---|---|
| Estate for years | A fixed term, such as 12 months or 99 years | Automatically on the end date |
| Periodic tenancy | Repeating periods, such as month to month | Notice from either side, as state law requires |
| Tenancy at will | No set term, with the owner’s permission | Notice from either side, or as state law sets |
| Tenancy at sufferance | A tenant stays after the right to be there ended | The landlord either accepts rent or starts eviction |
Despite its name, an estate for years can be any fixed length, even a few months. Most residential leases are estates for years or periodic tenancies.
Leasehold vs freehold
- Freehold: ownership, such as fee simple. The owner can sell, mortgage or pass on the property with no end date.
- Leasehold: possession for a time. The tenant can use the property as the lease allows, and sometimes sell or sublet that right, but ownership stays with the landlord.
In long ground leases, a tenant may build and own a building on someone else’s land for decades. When the ground lease ends, the land and often the building go back to the landowner, which is why the remaining term matters so much to the building’s value.
Example
A restaurant signs a 15 year lease on a building. For those 15 years it holds an estate for years: it can occupy and operate the space, and with the landlord’s consent it may assign the lease to a buyer of the business. If it stays after the lease ends without a new agreement, it becomes a tenant at sufferance until the landlord accepts rent, which may create a periodic tenancy, or files to recover possession.
Why it matters for landlords
The type of leasehold decides how a tenancy ends and what notice is needed. A fixed term ends on its date; a periodic tenancy needs proper notice; a holdover can turn into a month to month tenancy if you accept rent without a plan. Track lease end dates and renewal decisions so nothing converts by accident. In TenantLoop each lease shows its term and end date, and renewal status sits on the lease. Property law differs by state, so ask an attorney about a specific lease.
Related terms
In practice. How the term shows up day to day.
Is a leasehold estate real property?
Traditionally, a leasehold is treated as personal property, sometimes called a chattel real, even though it gives rights in land. Long ground leases can be treated differently for tax and lending purposes.
Can a leasehold be sold?
Often, by assignment, if the lease allows it. Long commercial and ground leases are commonly bought and sold, usually with the landlord's consent.
What happens to a leasehold when the property is sold?
In most cases the lease survives the sale and the buyer becomes the new landlord, bound by its terms. Foreclosure can be different, depending on state law and whether the lease came before the mortgage.