What distinguishes a leasehold estate from a freehold estate?

The distinction between a leasehold estate and a freehold estate primarily lies in the length of ownership. A leasehold estate refers to an arrangement where a tenant holds rights to use and occupy a property for a specified duration as outlined in a lease agreement, which can vary in length—days, months, or years. This type of estate is temporary, and ownership ultimately reverts back to the landlord or property owner once the lease term expires.

Conversely, a freehold estate is characterized by a more permanent interest in the property. The owner of a freehold estate has unlimited duration of ownership and considerable rights regarding the property, which may include making alterations or renovations without the constraints typically found in a leasehold situation.

While aspects like the ability to make renovations, rent the property out, or pay property taxes are relevant to both types of estates, they do not fundamentally distinguish them the way the duration of ownership does. Leaseholders are often restricted in their ability to modify the property and generally cannot rent it out without explicit permission from the landlord, while property taxes typically apply to freehold estates as part of ownership responsibilities. Thus, the duration of ownership is the most significant factor in distinguishing between these two forms of property estate.