Real Estate Appraisal Practice Exam

Which type of estate grants all rights of ownership to the holder?

1. Life estate

2. Leasehold estate

3. Fee simple estate

4. Defeasible fee estate

The correct answer is: Fee simple estate

The fee simple estate is recognized as the highest form of property ownership available. This type of estate grants the holder complete and unconditional rights over the property, including the right to use, lease, sell, or even will the property to heirs without limitations. The owner of a fee simple estate has the most comprehensive control and can exercise their rights perpetually, as long as they abide by governing laws and regulations. In contrast, a life estate is limited to the duration of a specific individual's life, after which ownership reverts to another party. A leasehold estate allows for possession and use of the property but typically does not convey full ownership rights, as the property ultimately belongs to the lessor. A defeasible fee estate offers ownership that can be voided under certain conditions, which means the owner's rights are not absolute or guaranteed indefinitely. Hence, the fee simple estate clearly stands out as the option that provides all rights of ownership to the holder.