California Real Estate Practice Exam

What type of interest do children hold in their parent's property if it is subject to a life estate to another?

1. Direct interest

2. Remainder interest

3. Joint tenancy interest

4. Life interest

The correct answer is: Remainder interest

A remainder interest is a type of future interest in property. In this scenario, the parent retains a life estate, meaning they can use the property during their lifetime, but upon their death, the property will pass to another individual. The child in this case would hold a remainder interest, meaning they will have a legal right to possess and use the property once the life estate ends. The other options, including direct interest, joint tenancy interest, and life interest, do not accurately describe the situation. A direct interest is typically a present ownership interest, which is not the case here since the parent only has a life estate. Joint tenancy is a type of co-ownership, which does not apply in this scenario where the parent has sole ownership during their lifetime. A life interest is similar to a life estate, so it is not the best answer.