Kovats Real Estate School Practice Test

What is a key advantage of a freehold estate compared to other forms of ownership?

1. It allows for lease arrangements

2. It is not transferrable

3. It provides more long-term security

4. It is subject to lesser taxes

The correct answer is: It provides more long-term security

A freehold estate is characterized by an ownership interest that typically lasts for an indefinite period and provides the owner with a higher degree of control and rights over the property. One of the key advantages of a freehold estate is that it provides more long-term security compared to other forms of ownership, such as leasehold estates, which are limited to a specified duration. This long-term security allows the owner to enjoy the property without the concern of it being taken away after a set period, which can occur with lease agreements that have a fixed term. Additionally, freehold ownership conveys the right to make decisions about the property, including the ability to develop, improve, or sell it without the restrictions that often accompany other forms of ownership. In contrast, leasehold arrangements involve a particular duration and can limit rights concerning modifications or subleasing. Being non-transferable would mean the owner cannot sell or pass on the estate, which is contrary to the nature of freehold estates. While taxes can vary, there isn’t a broad rule that freehold estates are subject to lesser taxes; taxation typically depends on local laws and can be influenced by many factors. Thus, the long-term security offered by freehold estates is a significant advantage in property ownership.