What does "leasehold estate" refer to in real estate?

A leasehold estate refers to a property interest that grants a tenant the right to occupy and use a property that they lease from the owner. This arrangement involves an agreement, typically documented in a lease, that specifies the terms under which the tenant can reside in the property for a defined period. The tenant does not own the property but has exclusive rights to possess and use it as agreed upon in the lease, making it an essential concept in real estate transactions.

The nature of leasehold estates is significant because they establish a temporary relationship between the landlord (the property owner) and the tenant, differing fundamentally from ownership where the individual holds title to the land and all improvements on it. In this context, appreciating that leasehold estates are limited in duration and defined by the lease terms is critical for understanding how they operate within real estate.