Certified Residential Appraiser Practice Exam

What does the right of reversion signify in a lease agreement?

1. The tenant has extended use of the property

2. The property returns to the owner when the lease ends

3. The property is permanently transferred to the tenant

4. The lease automatically renews

The correct answer is: The property returns to the owner when the lease ends

The right of reversion in a lease agreement signifies that the property will return to the landlord or property owner upon the conclusion of the lease term. This legal concept ensures that once the lease expires, the tenant relinquishes their claims to the property, and ownership and control automatically revert back to the landlord. This is a fundamental aspect of lease agreements, as it maintains the property owner's ultimate rights to their property regardless of the tenant's occupancy. It is crucial for landlords and property owners to understand this right, as it secures their ability to regain possession and control over their assets after a lease period. The other options, while related to aspects of leasing, do not accurately reflect the nature of reversion. Some options imply extended rights or perpetual ownership for the tenant, which is contrary to the basic principles of lease agreements where ownership does not transfer permanently with a lease.