Certified Residential Appraiser Practice Exam

Which of the following best describes a leasehold estate?

1. The property is owned by the tenant.

2. The tenant has rights to occupy the property under a lease.

3. The landlord has full access at all times without notice.

4. The agreement is always verbal.

The correct answer is: The tenant has rights to occupy the property under a lease.

A leasehold estate is best described as a situation where the tenant has rights to occupy the property under a lease. This arrangement allows the tenant to use and enjoy the property for a specified period of time in exchange for rent, but it does not grant ownership of the property itself. The tenant's rights are established and protected by the lease agreement, which outlines the terms and conditions of the lease, such as duration, rent, and responsibilities for maintenance and repairs. In this context, the other choices do not accurately reflect the nature of a leasehold estate. Ownership of the property is retained by the landlord, not the tenant. While a landlord may have certain rights with regard to property access, this is not unrestricted and usually requires notice to the tenant, depending on the terms of the lease. Moreover, lease agreements are typically documented in writing for legal clarity, although they can also be verbal; however, stating that the agreement is always verbal is inaccurate as written leases are common and often preferred for their enforceability.