If you have ever had to choose between buying an apartment or a house you will most likely, and perhaps unwittingly, have been choosing between a freehold and a leasehold interest in land.

Few people are aware of the substantial differences between these two types of ownership. Today, I will examine the historical background to land ownership and the differing rights and obligations that arise as a consequence of how land is held.

The system of land law in Bermuda derives from the English feudal structure imposed after the Norman Conquest. To reward his followers, William I provided them with land to be held from the Crown. In return he expected certain services such as the provision of armed men to fight for the King. This is why even today on the death of the owner land will revert to the Crown if there is no Will and there are no surviving family members.

The term freehold arose from the fact that the tenants of the Crown were protected by the King from eviction and that the services they provided were clearly defined rather than being of a servile nature.

Over time a freeholder has come to be seen as an absolute owner of land. If he holds a life interest then it will come to an end on his death but if he holds an estate in fee simple then his right to enjoy and use the land is only limited by statute and the rights of his neighbours.

This means that he also owns the airspace above the land, to such height as is needed to enjoy it, and the soil and minerals below it. He can also sue anyone who commits a trespass or nuisance on his land.

That said, if a man wishes to build on his land then he is likely to need planning consent and building control approval.

If he keeps animals on his land then he could be sued for any injury caused by their escaping. Similarly, if anything on his land falls into disrepair and injures a passer by he will be liable. Any unpleasant odours emanating from his land may make him liable to his neighbours for nuisance.

Others may have rights over the land, such as a right of way over a shared road or path or a right to use services which run under the land.

If someone squats on his land for over 21 years without hindrance then they may become entitled to it.

By contrast, a person who leases land is granted a right to use the land over a specified period of time rather than given outright ownership. He has a depreciating asset. Consequently his interest in land has always been seen as inferior to that of a freeholder.

A person who leases land for a fixed term of say 99 years may have little to pass on to his heirs unless the landlord is prepared to renew the tenancy at the end of the term.

However, a leaseholder who holds a 999-year lease rent-free is unlikely to be too concerned. His interest is almost as valuable and as secure as that of a freeholder. The one difference is that he is still bound by his obligations in the lease and he is still reliant on the landlord to meet his responsibilities.

A leasehold property can take a number of forms ranging from part of a converted house to a condominium or an apartment in a larger block. The purpose of the lease is to govern the relationship of the tenant with the other leaseholders and with the freeholder who owns the land on which the apartment is built.

Occupation of an apartment within a block means that some activities have to be done on a collective basis. This can include insurance of the building, maintenance of garden and grounds, cleaning of communal parts such as corridors, halls and stairs, and shared utilities such as water, gas and electricity. Other activities and obligations are imposed on the tenants, for example internal painting of the premises, and noise control.

The cost of all responsibilities falls on the property owners either directly or indirectly through insurance and service charge contributions. The difficulty is that the condition of the building depends on it being well run and maintained. If someone is not meeting his obligations then the structure may soon deteriorate.

Whatever form your property takes, whether it be freehold or leasehold, the important thing to bear in mind is that there are potential pitfalls for the unwary. Your attorney can assist you by checking the deed and the lease where applicable, and will be able to advise you of your potential obligations.

Time spent making careful enquiries before you commit yourself to a new home can save a great deal of expense and heartache once you are in occupation.

Attorney Martin Mitchell is a member of the Property Department at Appleby Spurling & Kempe. You can write to him with your questions or comments at mmitchell yask.bm. Copies of Mr. Mitchell's columns can be obtained on the Appleby Spurling & Kempe web site at www.ask.bm.

This column should not be used as a substitute for professional legal advice.

Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.