What is the definition of a leasehold estate in real estate?

A leasehold estate in real estate is defined as an interest in real property that lasts for a fixed term. This type of estate is created when a landlord (lessor) grants a tenant (lessee) the right to use and occupy a property for a specified period of time, as outlined in a lease agreement. The tenant does not own the property outright but is given temporary possession and use of the property in exchange for rent.

The concept of leasehold estates is common in rental situations, where the tenant is responsible for the property during the term of the lease, which can vary from months to years. Importantly, once the lease term expires, the rights to the property revert back to the landlord, unless a renewal or extension is negotiated.

Understanding this definition is crucial, as leasehold estates differ fundamentally from freehold estates, which involve ownership of the property itself. This difference is key to differentiating between various forms of property interest in real estate.