Texas Real Estate State Practice Exam

Which term refers to ownership by one party for the benefit of another?

1. Trust

2. Tenancy in Common

3. Joint Tenancy

4. Defeasible Fee

The correct answer is: Trust

The correct term that refers to ownership by one party for the benefit of another is indeed a trust. In a trust arrangement, the person who holds the title to the property is known as the trustee, and they are legally obligated to manage the property for the benefit of another party, known as the beneficiary. This legal setup allows for a division of ownership interests, where the trustee has control and management responsibilities while the beneficiary enjoys the benefits of ownership. Understanding trust arrangements is crucial in real estate as they often play an essential role in estate planning, asset protection, and even in certain investment strategies, where one individual or entity holds assets for the benefit of another. Terms like tenancy in common, joint tenancy, and defeasible fee relate more to the direct forms of property ownership and do not encapsulate the concept of one party owning property on behalf of another.