Also known as: leasehold interests · leasehold
Written by attorneys · grounded in primary & secondary sources — see below
A possessory interest in real or personal property that arises under a lease contract and entitles the holder to use and occupy the property for the lease term. The interest encompasses both the lessee's right to possession and the lessor's reversionary rights. Its economic value is measured by the difference between contract rent and market rent when the interest is taken or terminated.
Lillian Locke grants Leonard Lowe a five-year lease on commercial space that includes an option to purchase the building. When the lease expires, Leonard attempts to exercise the option. The duration of the option is governed by landlord-tenant rules because it is appurtenant to the leasehold interest rather than standing alone.
Lorenzo Lugo holds a ten-year lease on church property that the county temporarily restricts through an interim ordinance. The restriction prevents any use of the premises for several years. Lorenzo's leasehold interest is compensable under the Just Compensation Clause because the government action extinguishes the economic value of that interest for the period of the restriction.
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Lucia Lopez signs a residential lease requiring the landlord to maintain the premises in habitable condition. When the landlord fails to repair a leaking roof, Lucia withholds rent. The leasehold interest is treated as a contractual arrangement rather than a feudal estate, so the covenants are dependent and Lucia may raise the landlord's breach as a defense to eviction.
Logan Lane leases retail space from Landmark Realty. Persistent flooding caused by a defective roof renders the premises unusable. Logan vacates after repeated complaints. The leasehold interest is terminated by constructive eviction, relieving Logan of further rent obligations because the landlord's failure substantially deprives him of the benefit of the lease.
Lila Lin leases property to Legacy Motors with an option to purchase that extends beyond the lease term. The option is held to violate the rule against perpetuities. Because the option is not appurtenant to the leasehold interest in the manner required by landlord-tenant law, it is invalid and unenforceable.
Lakewood Manufacturing leases an apartment building to multiple tenants. The units contain serious code violations that the landlord refuses to repair. The tenants withhold rent and sue. The leasehold interest carries an implied warranty of habitability that the landlord breached, allowing the tenants to recover damages measured by the difference between the rent paid and the fair rental value of the defective premises.
The value equals the present worth of the difference between the contract rent and the fair market rent for comparable space over the remaining lease term. This measure compensates the tenant for the economic advantage lost when the leasehold interest is extinguished.
The leasehold interest itself passes to the assignee, but any contractual obligations assumed by the assignor remain enforceable against the assignor unless the landlord expressly releases them. Privity of contract survives the transfer of the estate.
Authority tied to a specific property ends automatically when the principal sells its entire leasehold interest in that property. The agent can no longer bind the principal to new leases because the subject matter of the agency no longer exists.
A lessee in the ordinary course of business takes the leasehold interest free of a security interest created by the lessor even if the security interest is perfected. The lessee's rights under the lease contract are protected against the lessor's creditors.
…a tenant the property right to have a CATV installation placed on the roof of his building, as an appurtenance to the tenant's leasehold. The short answer is that § 828(1)(a) does not purport to give the tenant any enforceable property rights with respect to CATV installation, and the lower courts did not rest their…