What Is the Difference Between a Leasehold & a Freehold Property?

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Leasehold and freehold estates are types of property developed under the common law system. Leasehold estates are considered non-freehold estates, meaning they endure for a fixed calendar period. Freehold estates have the potential to endure forever or for the duration of a possessor's life. Although freehold and leasehold property is distinguished by the duration of time each can be held, both are considered present possessory estates.

Fee Simple

  • The fee simple is an example of a freehold estate and one of four present possessory estates. A fee simple estate, or fee simple absolute, has the potential of enduring for an infinite amount of time. In property law, fee simple estates are typically created by grantors who state in a conveyance, "to X and his heirs," or "to X and his heirs in fee simple." A grantor of a fee simple must have the same type of ownership, meaning he cannot grant absolute ownership unless he has the same.

Fee Tail

  • A fee tail is a freehold estate that also has the potential of lasting forever. The fee tail came out of feudal England as a way to keep property in families for as long as possible. Fee tails are only allowed in Rhode Island, Delaware, Maine and Massachusetts. Although the fee tail has the potential to endure for an infinite period of time, if may cease if/when the first fee tail tenant fails to produce a lineal descendent. Fee tails are evidenced by the words, "to X and the heirs of her body."

Life Estate

  • Life estates are freehold estates that end at the death of the property's possessor. Life estates are still common in the United States and often granted in wills. In property law, the intent to create a life estate is evidenced by a grantor stating, "to X for life." Life estates "revert" back to the original owner or his heirs upon the death of the life estate tenant. In other words, life estate tenants cannot grant their life estate to their own heirs.

Leasehold Estate

  • A leasehold estate is a non-freehold estate. Leaseholds give tenants possessory interests subject to the terms of a lease. Leasehold estates typically come in one of three forms. A leasehold for a term of years is one that endures for a fixed calendar period. A leasehold from period to period, or "periodic tenancy," lasts until a landlord or tenant gives notice to terminate it. A tenancy at will endures as long as the landlord and tenant wish it to.

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