Which of the following best describes a leasehold estate?

A leasehold estate is best characterized by an interest that is limited to a specific duration, which aligns perfectly with the choice indicating this feature. Leasehold estates are established when a landlord (lessor) grants a tenant (lessee) the right to occupy and use a property for a designated period, defined by the terms of the lease agreement. This type of estate does not confer ownership of the property; instead, it allows the tenant to possess the property temporarily, often with conditions and limitations that are outlined in the lease.

Understanding that a leasehold is inherently time-limited is fundamental to recognizing the distinction between leasehold and freehold estates. Freehold estates, in contrast, represent ownership of the property, which can be perpetual, whereas a leasehold estate does not afford that permanence. This distinction further underlines why the second option aptly describes the nature of a leasehold estate compared to the other choices provided.