Final answer:
The arrangement where one owner's interest in a property automatically passes to the surviving owner upon death is known as a joint tenancy, characterized by the right of survivorship.
Step-by-step explanation:
When Fergie and Gus buy a cabin in the Smoky Mountains near Gatlinburg, Tennessee, and on the death of either owner, that owner's interest in the cabin passes to the surviving owner, this arrangement is known as a joint tenancy. A key characteristic of a joint tenancy is the right of survivorship, which means that when one joint tenant dies, their interest in the property automatically passes to the surviving joint tenant(s), rather than to the heirs or through the will of the deceased. This is distinct from a tenancy in common, where the deceased's interest would pass according to their will or intestate succession laws.