Which statement best describes a leasehold estate?

• A. It is a freehold estate.
• B. It is a possessory interest created by a lease.
• C. It is a future interest only.
• D. It is the owner's fee simple interest.

Answer: (B)

A leasehold estate is a present, nonfreehold possessory interest created by a lease. The tenant gains the right to occupy and use the property for a defined period under the lease terms, while the ownership title remains with the landlord. This distinguishes it from a freehold estate (ownership of indefinite duration), from a future interest (no current possession), and from the owner's fee simple interest (complete ownership). Because the tenant has current possession and use for a set term, the correct description is a possessory interest created by a lease.