Which statement correctly contrasts leasehold and fee simple ownership?

Which statement correctly contrasts leasehold and fee simple ownership?

• A. Leasehold is a form of ownership with indefinite duration; fee simple is a tenancy with limited duration.
• B. Leasehold is a form of ownership with limited duration; fee simple is outright ownership of the land and improvements with no termination.
• C. Leasehold requires mortgage while fee simple does not.
• D. Leasehold confers ownership of land only; fee simple confers ownership of building only.

Answer: (B)

The key idea here is the difference in how long you can hold the interest and what you actually own. A leasehold gives you the right to use and occupy the property for a defined term, but the underlying title stays with the landowner, so you don’t own the land or the buildings outright—your rights end when the lease term ends (unless renewed). Fee simple represents full, outright ownership of the land and any improvements, with no inherent end date. You own the property indefinitely and have the broadest set of rights to use, sell, or transfer it. This makes the statement that leasehold has limited duration and fee simple is outright ownership with no termination the best description. The other options mix up duration, ownership scope, or the nature of ownership (for example, mortgages can apply to either form, and ownership in fee simple covers both land and improvements, not just one).

The key idea here is the difference in how long you can hold the interest and what you actually own. A leasehold gives you the right to use and occupy the property for a defined term, but the underlying title stays with the landowner, so you don’t own the land or the buildings outright—your rights end when the lease term ends (unless renewed). Fee simple represents full, outright ownership of the land and any improvements, with no inherent end date. You own the property indefinitely and have the broadest set of rights to use, sell, or transfer it. This makes the statement that leasehold has limited duration and fee simple is outright ownership with no termination the best description. The other options mix up duration, ownership scope, or the nature of ownership (for example, mortgages can apply to either form, and ownership in fee simple covers both land and improvements, not just one).