The fourth main type of security interest in real property is the sale-leaseback. A sale-leaseback is an agreement whereby an owner of real property sells that property in its entirety to a new owner. Under this agreement, the new owner then leases that same property back to the previous owner on a long-term basis, at an agreed-upon rate. Accordingly, the previous owner no longer owns the property, but he or she now has the right to continue using it under the sale-leaseback.

An example of a sale-leaseback would be when a corporation sells its commercial property to a real estate investment trust. A real estate investment trust is a company that owns and operates income-producing real estate. A real estate investment trust is essentially a tax designation for corporations who invest in real estate to reduce their corporate income taxes. Here, a corporation could sell its own office space to a real estate investment trust, and then lease it back to continue using the space to operate its corporation.

Finally, let’s wrap this article up with a few key points.