Level 1 - Chap 5: Leasehold Estates

A periodic estate (also known as a periodic tenancy)

has a fixed lease period wherein the lease is automatically renewed at the end of each lease period until the landlord or tenant acts to terminate it.

A prime example of a periodic estate

would be a month-to-month lease. In a month-to-month lease, the tenant and landlord have the option of terminating the lease agreement at the end of the month. However, if neither expressly terminates the lease, then it is understood that the lease is renewed.

Tenancy at Sufferance The last type of leasehold estate is called tenancy at sufferance.

Also known as an estate at sufferance, a tenancy at sufferance occurs when a tenant remains in possession of or continues to occupy a property beyond their lease term, without the consent of the landlord. When a tenancy at sufferance occurs, the tenant is referred to as the holdover tenant because they no longer have a standard tenant-landlord relationship.

Instead, they have personal property ownership for the duration of their lease.

And, as long as the tenant occupies the property, they will have to pay the landlord (lessor) rent.

Main points to remember about an Estate for Years:

Can be for any specified period of time Terminates automatically without automatic renewal No notice required from either party Kinda Fun Fact: An estate for years is NOT terminated by the death of either party involved, nor by the sale of the property (exchange of ownership).

There are four types of leasehold estates:

Estate for years Periodic estate Estate at will Tenancy at sufferance

New York, New York Whether set by the state or the city, there are rules and regulations surrounding leasehold estates you should be aware of.

Even with that familiarity, however, take care not to dispense legal advice on such matters — unless you are licensed to practice law. While we will get into some of that in greater detail in Level 9, here's a sampling of state- and city-specific laws...

Estate at Will: Example (cont.)

For example, a real estate broker allows their brother to live in a rental unit of a complex they own without signing a formal lease agreement. As long as the brother pays rent and the broker accepts it, the two parties would be operating under a tenancy at will. If at any point the broker wishes to sell the property, they would need to notify the brother with an appropriate termination notice.

Can You Be (State & City) Specific? A sampling of state & city lease laws (and the leasehold estate types affected):

New York State property law allows holdover tenants to be evicted by a specific eviction process that does NOT include the use of force (tenancy at sufferance). New York City law states that a tenancy for years lease lacking a specific duration of term defaults to an end date effective October 1st after possession began (estate for years). New York City law states that the automatic renewal feature of leases is NOT enforceable if a landlord fails to provide a written reminder to the tenant 15 days or more prior to the renewal (periodic estate).

Periodic Estate:

Not Even at Death Do We Part As is the case with an estate for years, a periodic estate will remain in force even in the event of the death of either party to the lease or upon the sale of the property being leased. How's that for being locked into a lease?!

Estate for Years (cont.)

Once the lease expires, neither the landlord nor tenant needs to act to terminate it. That happens automatically without notice being required from either party. In order to renew the lease, the landlord and tenant must come together and expressly agree to either renew the existing lease or create a new one.

Reversionary Right

Tenants have a special kind of "possessory estate" in the property for the duration of their lease, as long as they honor the terms and conditions of the lease contract. The grantor of this leasehold estate (the landlord) has a reversionary right, which means possession of the property reverts back to the landlord after the lease term has expired. The landlord's interest in the property is specifically known as a "leased fee estate plus reversionary right."

Residential Parties to Tenancy First things first. You should know that every residential tenancy consists of two parties:

The landlord and the tenent

The landlord:

The party granting the lease, a.k.a. the lessor

The tenant:

The party to whom the lease is granted, a.k.a. the lessee

The word "sufferance" here actually means to passively allow or tolerate something.

When a tenant remains in possession of a property beyond their legal tenancy, the landlord has the right to evict them. The landlord is passively allowing the tenant to stay in the property until that eviction can occur. However, if the tenant offers to pay the landlord rent, and the landlord accepts, the tenancy at sufferance becomes a periodic estate.

estate for years:

a leased possession of property for a certain, specific period of time; also known as a tenancy for years

A leasehold estate is

a type of property ownership that allows for the use and occupancy of a property that a tenant (lessee) does not actually own (and has no title to).

Although, like an estate for years, a periodic estate lasts

for a pre-determined length of time, the periodic estate does not have to have an ending date. It goes for as long as both the landlord and the tenant want it to last. Notice to terminate the lease is required.

Estate for years

is a leased possession of property for a certain, specific period of time. A lease created under an estate for years (also known as tenancy for years) stipulates a specific starting and ending time. Despite what the name implies, the amount of time in this type of lease doesn't have to be years. It can be any amount of time: days, weeks, months, or years. ⏰

An estate at will is a

leasehold estate that exists without the benefit of an actual lease document, termination date, or specific rental period. Oftentimes, with an estate at will, no rent is paid (or if it is paid, rent payment is not tied to a periodic schedule). Additionally, the tenant or the landlord can end the arrangement with proper notice at any point. Other than that, the landlord and tenant have all of the typical rights and obligations under any other type of leasehold estate. In a somewhat ironic twist, an estate at "will" DOES expire at the death of either party to the lease.

An estate at will is (an example)

relatively rare because most tenants want to have more certainty about how long they will be able to stay in their dwelling. Similarly, most landlords want the predictability of a tenant (and their rent payments) who is committed to a lease for a specific period of time. However, this type of tenancy can also benefit both parties if they value the flexibility it offers.

The leasehold estate occurs

when a tenant has temporary possession of a property and has the right to use the property, but does not have actual ownership interest.