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Leasehold interest is the legal right to use a piece of real property for a set period, granted by a real estate contract between a lessee (the tenant) and a lessor (the landlord or property management company).
In real estate, a leasehold interest refers to a structure where an individual or entity (lessee) leases the land (i.e. ground lease) from the fee simple owner (lessor) of the land for an extended period of time.
Leasehold interest refers to the occupancy rights that a property lessee has for a limited time under a lease in a non-freehold estate, which is a real estate agreement that does not convey ownership interest or rights to the title of a piece of real property.
There are four main types of leasehold estate, each having specific characteristics as to the lease period and the relationship between the landlord and tenant. The four types are (1) estate for years, (2) estate from period to period, (3) estate at will, and (4) estate at sufferance.
Although a leasehold estate is said to be an interest in real property, the leasehold itself is in fact personal property. The law recognizes three types of leasehold estates: the estate for years, the periodic tenancy, and the tenancy at will.
A lease, like a freehold interest in a property, has both legal and beneficial ownership. The legal owner will be the person or persons named on the lease and (in the case of a registrable interest) recorded as being the leaseholder at HM Land Registry.
Leasehold interest is the legal right to use a piece of real property for a set period, granted by a real estate contract between a lessee (the tenant) and a lessor (the landlord or property management company).
Use the Income Approach to Value the Leasehold InterestMultiply the annual savings generated by the relatively lower rent expense by the appropriate present value factor. You can estimate annual savings generated by the leasehold interest by subtracting actual rental fees from fair market rental fees.