Certified Residential Appraiser Practice Exam

Which interest provides rights of use and occupancy limited to the lifetime of a designated party?

1. Leasehold interest

2. Life estate

3. Lease fee interest

4. Affirmative easement

The correct answer is: Life estate

The correct answer is the life estate, which is a type of interest in real property that grants rights of use and occupancy to an individual, but only for the duration of that person’s life. Once the designated party passes away, the rights associated with the life estate terminate, and ownership of the property typically passes to a remainderman or returns to the original owner, depending on how the life estate is structured. This legal framework allows individuals to enjoy and use the property during their lifetime without transferring full ownership, thereby providing a secure living situation while ensuring the property will eventually transition as intended after their death. In contrast, a leasehold interest grants temporary use of the property for a specified term but does not limit the rights strictly to the life of the lessee. A lease fee interest refers to the ownership of the land subject to a lease, implying a more permanent interest than just a lifetime right. An affirmative easement allows one party to utilize another party’s property for a specific purpose, which is fundamentally different than a right of occupancy limited to an individual's lifetime.