Which statement best defines "leasehold estate"?

A leasehold estate is correctly defined as an interest in real property that allows the tenant to occupy the property under a lease agreement. This definition captures the essence of a leasehold estate, which is fundamentally about the rights granted to a tenant by a landlord for a specified duration and under certain conditions as outlined in a lease. The leasehold estate represents a tenant's right to use and enjoy the property, typically for a defined period, while ownership of the property remains with the landlord.

This concept is integral to both residential and commercial real estate transactions, distinguishing leasehold interests from freehold estates, which convey full ownership rights. Understanding leasehold estates is important because they establish the framework for tenant rights and landlord obligations, influencing how properties are utilized and the legal protections afforded to both parties.

The other options do not accurately capture the nature of a leasehold estate, with some significantly misrepresenting the legal relationship involved. For instance, outright ownership and temporary occupancy without rights fail to reflect the legal framework that protects the tenant's rights within a lease agreement. Similarly, limiting the definition to commercial arrangements disregards the broader applicability of leasehold estates in various real estate contexts, including residential leases.