Leasehold

From ArticleWorld

Leasehold may be defined as an agreement between the lessee and lessor specifying the lessee's rights to use and have exclusive possession (but not ownership) of real estate for a specified period of time at a specified rental payment. These rights are subject to the fulfillment of certain conditions as recorded in a lease agreement.

History

The relationship (lessor and lessee) was born in traditional societies where the feudal system of landlords owning thousands of hectares of land with many tenants living off it and paying rent for the same was common. In Britain, India and many other Commonwealth countries the system survives even today.

Characteristics of leaseholds

The property is leased by the owner to a leaseholder or tenant for a fixed number of years. This period is usually 50 or 99 years after which if ownership in not renewed, it reverts to the government. Britain held the tenancy rights of Hong Kong for 99 years but it now belongs to People’s Republic of China after the ownership reverted to it in 1997.

In personal leases (freehold property) the parties have the option that the lease may be extended if necessary, and leaseholders may have the right to buy the land if the lease is for a period exceeding 21 years. Any improvements on the land, in the form of building a house or other additions, legally belong to the occupant but the ownership is subject to the terms of the lease.