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What Is Freehold Estate?

Both lessors and lessees should understand their rights and interests in a property.

[Updated: Feb 04, 2021 ] Aug 15, 2020 by Barbara Bellesi Zito

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Type of Freehold Estate What It Means
Fee simple absolute
  • Owner can use the land as they see fit, provided it's within zoning laws.
  • Owner must continue to pay mortgage, taxes, estate charges, etc.
  • Owner can sell, transfer, or bequeath the property to an heir.
  • Limited by four government powers: police power, eminent domain, taxation, and escheat.
  • Fee simple defeasible
  • The owner must use the land only in the way it was primarily intended.
  • Should the owner not uphold this agreement, the ownership ceases (fee simple determinable).
  • If owner (or owner's estate) agrees to terminate ownership, it's known as a fee simple subsequent.
  • Life estate
  • A grantor allows the grantee (life tenant) to hold an interest in the estate for the lifetime of the grantor.
  • The life tenant is required by law to maintain the property.
  • Should the life tenant pass away before the grantor, the property reverts back to the grantor (estate in reversion).
  • Type of Nonfreehold Estate What It Means
    Estate for years
  • Lease must have a beginning and an end date, though it can be renewed; a common example is a year-long lease between landlord and tenant.
  • Estate from period to period
  • Also known as periodic tenancy; tenant becomes periodic tenant after fixed-term leasehold expires.
  • Tenant can renew and pay the rent while also continuing to occupy or maintain an interest unless tenant or landlord gives notice.
  • Lease will renew for the same amount of time automatically until otherwise determined.
  • Tenancy at will
  • Lease can be ended at any time at either party's request. 
  • Often used for short-term renters or when the property is on the market and a sale is imminent but a tenant still occupies it.
  • Landlord must give the tenant a reasonable amount of time to move in the event the property is sold.
  • Tenancy at Sufferance
  • Occurs when a tenant who previously had a rightful interest loses that right but does not vacate the property. 
  • Tenant is subject to eviction at any time without any notice.
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