The amount and type of interest that an individual has in real property is called an estate in land. An estate includes a present or future right to ownership and/or possession of the real property. While an estate in land grants the right to possess the property, an interest, such as an easement, bestows only a right to use the land. Estates in land are divided into two main classifications: freehold estates and nonfreehold estates. Freehold estates are those involving ownership, while nonfreehold estates are those involving tenants. This article will compare freehold and nonfreehold estates, and describe the four types of nonfreehold estates. (For help with your estate, check out 6 Estate Planning Must-Haves.)

Freehold Estates
In order to understand what a nonfreehold estate is, it is helpful to understand the concept of a freehold estate. Freehold estates are estates of indefinite duration that can exist for a lifetime or forever. Some types of freehold estates are classified as "estates of inheritance," where the estate continues beyond the life of the holder and descends to their living heirs upon death as specified by the will or by law. Examples include the fee simple estate or the defeasible fee estate, which continue for an indefinite period and are inheritable by the owner's heirs. Other freehold estates are referred to as "estates not of inheritance" or "life estates," which exist only for the term of a person's life. The ordinary conventional life estate with remainder or reversion, for example, does not continue for an indefinite period, but terminates when the person on whose life the estate is based, or the life tenant, becomes deceased. (To learn more, see Getting Started On Your Estate Plan.)

See: Estate Planning

Nonfreehold Estates
A nonfreehold estate is an interest in real property that is less than a freehold estate. Nonfreehold estates are not inheritable and are said to exist without seisin. Seisin denotes ownership: an individual who is "seised" of an estate is the owner of the estate. Also known as a leasehold estate, a nonfreehold estate is created through a lease or rental agreement that can be either written or oral. The holder of a nonfreehold estate (the tenant or lessee) holds no ownership interest in the real property, and only has the right to use the property as established in the terms of the lease or rental agreement. Ownership remains with the landlord (lessor). (To learn more, see Becoming A Landlord: More Trouble Than It's Worth?)

Types of Nonfreehold Estates
Because nonfreehold estates involve tenants, they are often referred to as "tenancies." There are four types of tenancies:

Tenancy for Years

Tenancy from Period to Period

Tenancy at Will

Tenancy at Sufferance

The Bottom Line
Estates in land can be broadly classified as either freehold or nonfreehold. A freehold estate indicates ownership, while a nonfreehold estate, sometimes referred to as the law of landlord and tenant, involves a lessor and lessee arrangement. It is possible that various types of nonfreehold estates can apply to the same rental over a period of time. For example, a tenant could start out with a one-year lease (tenancy for years), and once that period is over, the tenancy could switch to a month-to-month basis (tenancy from period to period). The type of estate that a person has in real property establishes the duration and the scope of their rights to ownership and/or possession of the property.

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