California Real Estate Practice Exam

Under a lease agreement, who holds the leasehold estate?

1. Beneficiary

2. Lessee/Tenant

3. Lessor

4. None of the above

The correct answer is: Beneficiary

In a lease agreement, the party that holds the leasehold estate is the lessee, or tenant. The leasehold estate refers to the tenant's right to occupy and use the property for a specified period according to the terms outlined in the lease agreement. This interest allows the tenant to benefit from the property for the duration of the lease, but it does not equate to ownership, which remains with the lessor, or landlord. In this context, the lessor retains ownership while granting the lessee a temporary interest in the property, thus establishing the leasehold estate. Understanding this distinction is crucial, as it highlights the relationship between the two parties and outlines the rights and responsibilities of each.