Types of Estates: Freehold vs. Leasehold
Definition
A freehold estate conveys ownership rights, while a leasehold estate grants the right to possess and use property for a specific period without ownership.
Example
Owning a house with the right to sell it, will it, or give it away is a fee simple absolute estate. Renting an apartment for a year is a leasehold estate.
Exam Tip
Focus on the duration of the estate. Freehold estates are indefinite, while leasehold estates have a specific term. Remember that a 'life estate' is still a freehold estate, even though its duration is tied to a life.
Related Ownership Terms
Real Property vs. Personal Property
Real property is immovable land and anything permanently attached to it, while personal property (also called chattels) is movable.
Joint Tenancy
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
Tenancy in Common
Tenancy in common is a form of co-ownership in which two or more persons hold separate, undivided interests in property without the right of survivorship. Each owner can hold unequal shares and can independently transfer their interest.
Tenancy by the Entirety
Tenancy by the entirety is a form of co-ownership available only to married couples that includes the right of survivorship and protection from individual creditors. Neither spouse can unilaterally sell or encumber the property.
Community Property
Community property is a form of ownership recognized in certain states where property acquired during marriage is considered equally owned by both spouses, regardless of who earned the money or whose name is on the title.
Condominium Ownership
Condominium ownership involves owning a unit of airspace within a multi-unit building plus an undivided interest in the common elements shared with other unit owners. Each unit is separately taxed and financed.
Frequently Asked Questions
Test Your Ownership Knowledge
Practice with exam-style questions to make sure you can apply Types of Estates: Freehold vs. Leasehold and other ownership concepts.