A Non-Freehold interest is an estate that lasts for a definite time period and is not inheritable. There are four main types of Non-Freehold interests. Because these interests usually involve tenants, they are referred to as “tenancies.”
- Tenancy for years – also called an estate for years or tenancy for a definite term, this is an estate that is created by a lease. A lease is a contractual agreement where a tenant has interest in the property for a specific duration. The term must have a definite beginning and end. These leases terminate automatically at the specified end date without the need for notice by either party.
- Tenancy from period to period – an estate that exists when the tenancy is for a definite time, but is automatically renewable. These estates are of indefinite duration since they can be renewed indefinitely. A tenancy from period to period may be from year to year, month to month, week to week or even day to day.
- Tenancy at will – This type of tenancy can be terminated at any time by either the owner or the tenant. A tenant is generally entitled to a reasonable amount of time in which to vacate the property. Landlords may prefer a tenancy at will when a property is for sale and they may want tenants to vacate quickly. Tenants may favor a tenancy at will if they plan on renting only for a short period of time.
- Tenancy at sufferance – This type of interest exists as the result of circumstance, and is never deliberately created. It arises when a person goes into possession of land in a lawful manner, but remains on the property without any right to do so, and without the owner’s consent. The only difference between a tenant at sufferance and a trespasser is that the tenant at sufferance had at one time a right to be on the property, but has stayed beyond the terms of the previous agreement. The tenant in this situation can be evicted at any time without notice.
Perhaps the most important aspect of Non-Freehold interests to note when estate planning is that they are not inheritable. For example, if someone is a tenant in a house with a lease of one year and passes away, they cannot leave their “right of tenancy” in a will to any beneficiary. At death, the lease automatically terminates and the property rights revert to the landlord.