Which term describes a possessory interest in real property?

The term that best describes a possessory interest in real property is "estate." In real estate, an estate refers to the degree, quantity, nature, and extent of interest a person has in real property. It signifies ownership or the right to possess, use, and enjoy the property. Different types of estates, such as fee simple, leasehold, and life estate, illustrate the various forms of possessory interests that can exist.

While "tenancy" is related and refers to the arrangement of occupying real property, it specifically pertains to the renter's right to use and possess property under a lease agreement, not the broader concept of ownership. "Equity" refers to the value of an ownership interest in property after deducting liens and liabilities, while "liability" refers to financial obligations that might arise from owning real property. Thus, the choice of "estate" accurately captures the essence of a possessory interest in real property in a comprehensive manner.