Legal Definitions - leasehold mortgage

A leasehold mortgage is a type of mortgage that is secured by a leasehold interest in a property. This means that the borrower owns the right to use and occupy the property for a certain period of time, but does not own the property itself.

For example, if a business owner leases a commercial property for 10 years and wants to secure a loan using the leasehold interest as collateral, they would take out a leasehold mortgage.

The value of the leasehold interest is determined by the terms of the lease, including the length of the lease and the rent paid. If the rent paid is lower than current market rates, the leasehold value may be higher.

In some states, the lessee may be able to claim the leasehold interest from the landlord in a condemnation proceeding, unless the lease prohibits such a claim. Other states prohibit these claims by statute.