Leasehold Estate: How is it Relevant to You?

A leasehold estate is a complex hybrid of estate and contact. However, despite its complexity, it is a type of property right possessed by many Australians since leasehold estates cover both residential and commercial leases. Holistically, a leasehold estate is considered a lesser form of property right than a freehold estate. Unlike freehold tenancy, the duration of leasehold estate is measured in definite blocks of time, which can be sufficiently identified at the beginning of the lease.

Duration of the Lease

There are three main types of leases: a fixed-term lease, a periodic lease, and a lease at will. As the names suggest, a fixed-term lease is a lease where the duration of the lease is fixed to a certain period of time. In terms of periodic leases, such leases are renewed after a set period has elapsed. Practically, a periodic lease can be viewed as a series of fixed-term leases automatically renewed unless an event brings the tenancy to an end. It is common for residential leases to take the form of periodic leases with an option to renew each year. With regards to a tenancy at will, such tenancy exists when the tenant obtains the right to possession of the land on the understanding that their right may be taken away from them at any time by either the landlord or the tenant themselves.

Rights and Obligations

Under the leasehold estate, there are some covenants both statutorily and at common law conferred on both the landlord and the tenants.

For the tenants, some of these covenants include obligations to pay rent and taxes, keep the premises in good repair, not to damage the property, and allow the landlord to enter to view the state of repair. Other obligations the tenant have include a duty to use the premise in a tenant-like manner, which means to take proper care of the premise and do some small jobs here and there to maintain the property. However, it is noteworthy that a tenant is not responsible for repairing any damages if the house falls into disrepair through fair wear and tear or lapse of time or any reason not caused by the tenant. Otherwise, examples of landlord convents include that the landlord will grant the tenant quiet enjoyment of the premises and that the landlord will not do anything which takes away from the rights granted to the tenant under the lease.

If either the landlord or the tenant breaches a leasehold covenant, the other party can recover any loss caused by that breach. Generally, such action is dealt through the South Australian Civil and Administrative Tribunal (SACAT). Also, the party suffering the loss may consider seeking an injunction to stop further breaches from happening or seek an order for the covenant to be complied with.

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Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.

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