What is meant by the term "leasehold estate"?

The term "leasehold estate" refers specifically to the interest held by a tenant under a lease agreement. This legal arrangement grants the tenant the right to occupy and use the property for a specified period of time, under certain conditions, without transferring ownership of the property itself. The leasehold estate contrasts with freehold estates, where ownership of the property is held indefinitely.

In practical terms, the leasehold estate establishes a significant relationship between the landlord and the tenant, dictating how the property can be used, the duration of the use, and the obligations of both parties. This arrangement is fundamental in real estate law, as it clarifies the tenant's rights to possession and enjoyment of the leased property while outlining the limitations imposed by the lease agreement.

This concept is distinct from ownership of real property, which is held by the landlord, as well as from the transfer of property ownership or classifications of real estate types, such as commercial. Understanding leasehold estates is crucial for navigating landlord-tenant relationships and lease agreements.