Which of the following is a characteristic of a leasehold estate?

A leasehold estate is defined by the limited rights it grants to the tenant, which are expressly outlined in the lease agreement. This is why the option indicating that the rights are limited by the terms of the lease is correct. Leasehold estates do not provide the tenant with permanent ownership of the property; instead, they allow the tenant to use the property for a specified period under agreed-upon conditions.

The specific provisions in the lease dictate how the property can be used and what rights the tenant possesses, including any restrictions on alterations, subletting, or other actions. Consequently, the tenant does not hold the full bundle of rights typically associated with ownership, such as the ability to sell or transfer the property. Furthermore, leasehold estates do not usually allow for transfer through inheritance, as the rights are typically tied to the leaseholder’s life or the term stipulated in the lease. Thus, the concept of leasehold estate being defined by limited rights is instrumental in understanding both its nature and its function in property transactions.