Understanding The Different Leasehold Estates
When it comes to renting a property, there are different forms of Leasehold Estates. It is important to know the difference between the different forms of Leasehold Estates not only as a landlord but as a tenant as well. In order to establish a tenancy, a tenant must have a Leasehold. A Leasehold is an interest in real property held under a rental agreement by which the owner gives another the right to occupy or use land for a period of time. Once a tenant has a Leasehold, then a Leasehold Estate, also known as a tenancy, is formed after the tenant takes possession of land or property. The four different types of Leasehold Estates are:
1. Term of Years
2. Tenancy at Will
3. Periodic Tenancy
4. Tenancy at Sufferance
Starting with the first tenancy, Term of Years, which is a possessory estate that lasts for some fixed period of time. This means that it has a start date and an end date. Although it does not have to be for multiple years, it does have to have a specific time on a calendar. For example, if Larry the Landlord (“LL”) enters into a lease agreement with Terry the Tenant (“TT”) starting on January 1, 2020 and ending on December 31, 2020, LL and TT have a Term of Years tenancy. If the lease agreement does not have a start or end date, then the tenancy is not considered a Term of Years tenancy.
If the tenancy does not have a start date and an end date, then it is a Tenancy at Will. This kind of tenancy has no fixed period of time and endures so long as both landlord and tenant desires. The term can be in years, quarters, months, weeks, or even days. Generally a Tenancy at Will is not memorialized in writing due to its flexible nature. For example, if TT is in the process of building a home, he most likely would want to rent a home nearby as a Tenancy at Will until TT’s home is built. By having a Tenancy at Will, TT is able to rent a home to live in while his home is being built and would only need to provide the appropriate amount of notice before vacating the property, thus giving TT the flexibility he needs for his situation. Additionally, if LL is currently renting to TT and LL is considering selling his property, LL may want to create a Tenancy at Will, which would give him the flexibility to sell the property and give TT the required notice to vacate the property. Further, if death occurs to either party, that will terminate this type of tenancy.
The next kind of tenancy is a Periodic Tenancy. A Periodic Tenancy occurs when the landlord and tenant have already entered into a lease agreement with a fixed duration, meaning the lease had a starting date and an ending date, and continues past the fixed duration. When this happens, the period is extended automatically, whether it is year to year, quarter to quarter, month to month, or week to week. In order to terminate this type of tenancy, the tenant or landlord must provide the required amount of notice. Pursuant to Florida Statute, if the tenancy is year to year, then a minimum of 60 days is required. If the tenancy is quarter to quarter, then a minimum of 30 days is required. If the tenancy is month to month, then a minimum of 15 days is required. Lastly, if the tenancy is from week to week, then a minimum of 7 days is required. Unlike a Tenancy at Will, death of either party does not have an effect on this type of tenancy nor a Term of Years tenancy.
Lastly, the final tenancy is Tenancy at Sufferance. This is also known as the Holdover tenant. This type of tenancy occurs when a tenant remains in possession after the termination of the tenancy. When this type of tenancy occurs, the landlord has multiple options. The landlord may either evict the tenant for possession plus damages, or the landlord may consent to the creation of a new tenancy. For example, TT is renting a house from LL from January 1, 2020 until December 31, 2020 and LL gives TT the required notice that the tenancy is terminated upon expiration of the term and TT stays in the property and refuses to leave, LL is now able to either evict TT for possession of the property plus damages, or LL can let TT stay in the property. If TT stays in the property, pays rent, and LL accepts the rent, then TT goes from being in a Tenancy at Sufferance aka a Holdover Tenant to a Periodic Tenancy or a new term will be created.
Whether you are a landlord or a tenant, it is important to know the different kinds of Leasehold Estates that are used when renting a property. Understanding the differences between the different kinds of tenancies and the requirements that are associated with each can be beneficial to both landlords and tenants.