Certified Residential Appraiser Practice Exam

Which estate type includes the right to receive rent but not ownership of the physical property?

1. Leasehold interest

2. Fee simple estate

3. Partial interest

4. Life estate

The correct answer is: Leasehold interest

The correct answer, which reflects an estate type that includes the right to receive rent without ownership of the physical property, is a leasehold interest. A leasehold interest allows an individual, usually referred to as the lessee or tenant, to occupy and use a property for a specified period of time based on a lease agreement with the property owner (the lessor). The tenant pays rent and has the right to use the property, but they do not have ownership rights over the property itself. This distinction is important because while a leasehold interest grants rights to possess and use the property, it does not confer any ownership rights or long-term control over the asset like other estate types would. In contrast, a fee simple estate represents the most complete form of ownership, providing both the right to possess and use the property indefinitely and the ability to transfer ownership. A partial interest typically refers to ownership fractions or interests in a property, while a life estate grants ownership that is limited to the duration of a person's life, after which control reverts to another party. Therefore, a leasehold interest uniquely fits the description provided in the question.