Leasehold estate
A leasehold estate 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 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 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 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 timeeven 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. 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.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 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.
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.
Tenancy at sufferance
A tenancy at sufferance may exist when a tenant remains in possession of property even after the end of the lease, until the landlord acts to eject the tenant. The occupant may legally be a trespasser at this point, and the possession of this type may not be a true estate in land, even if authorities recognize the condition to hold the tenant liable for rent. The landlord may be able to evict such a tenant at any time without notice. Action to evict will terminate a tenancy at sufferance, because the tenant no longer enjoys possession. Some jurisdictions impose an irrevocable election whereby the landlord treats the holdover as either a trespasser, or as a tenant at sufferance. A trespasser is not in possession; but a tenant at sufferance continues to enjoy possession of the real property.
The landlord may also be able to impose a new lease on the holdover tenant. For a residential tenancy, such new tenancy lasts month to month. For a commercial tenancy of more than a year, the new tenancy is year to year; otherwise, the tenancy lasts for the same length of time as the duration under the original lease. In either case, the landlord can charge a higher rent, if the landlord, before the expiration of the original lease, has notified the tenant of the increase.
Simply leaving property behind on the premises does not constitute possession; thus, a tenancy at sufferance cannot be established. E.g., Nathan Lane Assocs. v. Merchants Wholesale, 698 N.W.2d 136 ; Brown v. Music, Inc., 359 P.2d 295.
Continuation tenancy
In some jurisdictions, the tenant has a legal right to remain in occupation of the premises after the end of a lease unless the landlord complies with a formal process to dispossess the tenant of the property. For example, in England and Wales, a business tenant has a right to continue occupying their demise after the end of their lease under the provisions of sections 24–28 of the Landlord and Tenant Act 1954. At the end of their lease they need do nothing but continue payment of rent at the previous level and uphold all other relevant covenants such as to keep the building in good repair. They cannot be evicted unless the landlord serves a formal notice to end the tenancy and successfully opposes the grant of the new lease to which the tenant has an automatic right. Even this can only be done under prescribed circumstances, for example the landlord's desire to occupy the premises himself or to demolish and redevelop the building.Contemporary practice
Australia
Leasehold land
Leasehold land is a land holding leased to a person or company by the relevant state ; however, all mineral rights are reserved to the Crown. There are different types of leasehold tenure from state to state. Pastoral leases cover about 44% of mainland Australia, mostly in arid and semi-arid regions and the tropical savannahs.There are three types of leasehold tenure in Australia:
- Term lease – usually 1–50 years, for a specified purpose.
- Perpetual lease, or lease in perpetuity – may be used only for a specified purpose.
- Freeholding lease – after approval is granted, convert a lease to freehold, and the lessee pays the purchase price in installments. This is an interim tenure; freehold title is not issued until all purchase costs have been paid.