What is a leasehold estate?

A leasehold estate refers to a temporary interest in real property, which is established through a lease agreement between a landlord and a tenant. In this arrangement, the tenant is granted the right to occupy and use the property for a specified period while the actual ownership remains with the landlord. This contrasts with ownership interests, such as freehold estates, where the owner has full rights to the property indefinitely.

Leasehold estates can vary in duration, ranging from short-term rental agreements to longer leases spanning several years, but they always have an end date. Therefore, the idea of a temporary interest is fundamental to understanding leasehold estates, as they do not confer ownership rights but rather possessory rights for a limited time.

Other options incorrectly describe the nature of a leasehold estate, as one does not involve permanent ownership, does not pertain to mortgage agreements, nor refers to a plot of empty land in the context of leasing.