A leasehold gives one party control over certain property of another party for a specified period. A leasehold does not designate rights of ownership. Rather, it conveys to an individual use and possession of property for a definite term and usually for an agreed rent (see 1030.010.10 Real Property as Available Resource).
EXAMPLE: George owns commercial property with spaces for three businesses in one building. George has leased one of the spaces to Ross for a pet shop for $600 per month. Within the terms stated in the lease, Ross may make improvements to the property, but the final approval on any structural work must come from George because he owns the building.
Leaseholds may also apply to other property. An individual may lease the use of his or her property rights in exchange for royalties on production, profits or other consideration.
EXAMPLE: Demelza’s grandfather, Dwight, passes away and leaves 10,000 acres of land in Colorado to her cousin, Drake. Silver had been found on the property 20 years ago and Dwight severed the mineral rights from the property at that time. When Dwight passed away, the mineral rights were divided amongst Demelza and her cousins. As a result, Demelza inherits a one-fifth share of the total mineral rights of her grandfather’s land. She and her cousins decide to lease the use of their mineral rights to the Denver Silver Company in exchange for production royalties.