Certified Residential Appraiser Practice Exam

What is a key feature of a lease agreement in a leasehold estate?

1. It always requires a large upfront payment.

2. It allows the tenant to occupy property for a specific time.

3. It is not legally binding.

4. It can be verbal and still enforceable.

The correct answer is: It allows the tenant to occupy property for a specific time.

A key feature of a lease agreement in a leasehold estate is that it allows the tenant to occupy property for a specific time. This time-bound nature of the lease is fundamental to leasehold estates, distinguishing them from other property interests. The lease defines the duration of the tenant's rights, including terms such as start and end dates, rent payment schedules, and any obligations of both the landlord and the tenant during that period. This characteristic ensures clarity and legal certainty regarding how long the tenant can utilize the space and under what conditions. Upon expiration of the lease term, the rights to occupy revert back to the landlord, which is a crucial aspect of leasehold estates—highlighting their temporary, rather than permanent, nature. Other options do not accurately reflect the characteristics of lease agreements. While upfront payments can exist in some leases, they are not a requirement that applies universally to all lease agreements. Additionally, lease agreements are legal documents that create enforceable obligations; thus, they must be legally binding. Finally, although verbal agreements can sometimes be enforceable for leases, written contracts are generally preferred for clarity and legal protection, particularly for longer-term leases.