Paralegal Advanced Competency Exam (PACE) Practice Exam

What is a freehold estate?

1. A leasehold arrangement with no specified duration

2. An estate for life

3. A temporary right of possession of property

4. A type of real estate owned by corporate shareholders

The correct answer is: An estate for life

A freehold estate refers to an ownership interest in real property that is not limited in time, as opposed to a leasehold estate, which is typically for a specified duration. The key characteristic that makes option B correct is the concept of an estate for life, which is a type of freehold estate. In a life estate, an individual holds rights to the property for the duration of their life, after which the ownership reverts to another party (remainder person). This highlights the ownership aspect inherent in a freehold estate, even though it can be finite in terms of the duration of use. The other options reflect different types of property interests that do not meet the criteria for a freehold estate. A leasehold arrangement is fundamentally different because it grants a temporary right to use and occupy property, typically under a contract, which is more characteristic of leasehold estates. A temporary right of possession pertains to situations like rental agreements, distinguishing it from the broader ownership associated with freehold estates. Lastly, while corporate shareholders may have ownership interests in property, this does not directly define a freehold estate itself; rather, it describes a different context of property ownership relating to business structures.