What is the difference between Remainder and reversion interests? Remainder interest: The creator of the life estate may name a remainderman as the person to whom the property will pass. Reversionary interest: The creator of life estate chooses not to name a remainderman, in which case the creator will recapture ownership.
What is the definition of remainder interest?
In general terms, a remainder interest refers to someone with a future interest in an asset. It may be a future interest in the estate created by a trust, a contingent interest when a life tenant surrenders a claim to the estate, or a vested interest that becomes effective at a specified future date. It is often created when a grantor leaves property to pass to a family member upon the grantor's death.
Can remainderman sell property?
While a life tenant cannot sell the property, a remainderman can sell their share. This means they can only sell their ownership rights, which within the terms of the life estate defines that the new buyer would only get full possession after the life tenant’s death and takes over the role of remainderman.
What is a remainder interest in real property?
Remainder (property law) A remainder is a future interest in land. It is the right to own and possess the land after the fixed interest of current holder expires. Thus, a remainder can follow a life estate or a term of years. It is created by the use of the phrase "then to" or similar language.
Can a remainder interest be sold?
In order to sell the property, the holder of the life estate and the holder of the remainder interest must sell it together. No one is going to buy the property from one of the stakeholders. Just like no one is going to buy a property from two owners if only one of them agrees to sell and signs the contract and deed.
What is the difference between a remainder interest and a reversion?
The key difference between a reversion and a remainder is that a reversion is held by the grantor of the original conveyance, whereas "remainder" is used to refer to an interest that would be a reversion, but is instead transferred to someone other than the grantor.
What is a reversionary interest in property?
A landowner who is concerned about the future use of his land can donate or sell the land on a conditional rather than absolute basis. A reversionary interest is created by a deed that reserves to the grantor a future ownership right upon the occurrence of some condition.
What is an example of reversionary interest?
In trust law terms, a reversionary interest is an interest that reverts back to the settlor of a trust once a beneficiary's interest has come to an end. For example, Bob gives a life interest in Rose Cottage to his mother Judy, and on Judy's death the cottage is to revert back to Bob.
What does reversionary mean in real estate?
Any future interest kept by a person who transfers property to another. A reversion occurs when a property owner makes an effective transfer of property to another but retains some future right to the property.
What is remainderman interest?
A remainder interest is a future interest a person has in an asset. A remainderman can exercise their right to use and hold property in a trust, but first, the trust must be dissolved. The life tenant can sell inherited property with the remainderman's consent.
Who has reversionary interest?
Reversionary interest refers to the right to occupy and use the land sometime in the future (future interest) e.g. upon the expiry of the lease period. In the case of the State land, after 99 years, the land returns to the state. The State is said to have a reversionary interest in the land.
Is a reversionary interest vested?
It has been a fundamental principle of American property law that reversionary interests, whether legal or equitable, are always vested. Such interests being vested ab initio, they cannot violate the rule against perpetuities.
Is a reversionary interest excluded property?
A reversionary interest (IHTM16231) which has been acquired (whether by its current owner or by any previous owner) for a consideration in money or money's worth is not excluded property (IHTM04251). A tax charge may therefore arise on the transfer, whether in lifetime or on death, of a purchased reversion.
What does reversionary mean?
Definition of reversionary : of, relating to, constituting, or involving especially a legal reversion.
What is an example of a reversion?
The definition of a reversion is a turn around, reversal or return to a prior condition. An example of a reversion is a couple getting married again after being divorced. A return to a former condition, belief, or interest.
What does reversionary rights of owners refer to?
Reversionary right in real estate simply means that the owner of the property has not given out his property absolutely, for he expects that no matter how long you enjoy the property, he would at the appointed date be able to reclaim his ownership.
How is a reversion related to a life estate?
In our story, the person who had the property is known as the holder of the life estate. And the king has the estate in reversion, which means that if the person dies, the land reverts back to the king.
What is a remainder interest?
A remainder interest is considered a future interest, meaning that the owner has a future interest in the property of some type that does not include current possessory rights. One type of remainder, or future, interest in property is a reversionary interest.
What happens to the property when the grantee dies?
In the case of a life estate, upon the death of the grantee, all interest and rights of possession also return to the original owner. In a lease agreement, the lessee is granted a number of rights to the property according to the terms of the lease.
Does a lease give a lessee the right to possession?
At a bare minimum, the lessee is granted the right of possession for the term of the lease. The lessee does not have absolute rights to the property. In fact, the condition subsequent in a lease agreement that reverts all rights to the original owner is the expiration of the lease.
Is a life estate a condition subsequent?
A life estate may be more complicated, as the rights granted to a grantee under a life estate may vary by jurisdiction. In any event, the death of the grantee is considered the condition subsequent which is required for the rights to the property to revert back to the original owner.
What is remainder interest?
A remainder interest is a future interest a person has in an asset. A remainderman can exercise their right to use and hold property in a trust, but first, the trust must be dissolved. The life tenant can sell inherited property with the remainderman’s consent.
What is a remainderman in a life estate?
Almost all deeds creating a life estate will also name a remainderman—the person or persons who get the property when the life tenant dies. Life estates are often used to provide for another person's well-being, without granting ownership of the relevant property.
What is a life estate without powers?
A life estate "with powers" gives the life tenant the ability to sell, mortgage, or otherwise encumber the property. In a life estate without powers, the life tenant requires the consent of the remainderman to encumber the property. Both are effective ways of bequeathing property without the hassle of probate.
What are the rights of a remainderman in a deed?
Remainderman Rights. One complicating factor to life estate deeds, especially in real estate dealings, is that all parties need to be aware that both the life tenant and the remainderman have ownership interests , despite each having different rights of possession.
What is a remainderman?
The remainderman is the person who inherits property after the termination of a life estate. For trust accounts, the remainderman receives the remaining principal after the estate has been distributed. A remainder interest is a future interest a person has in an asset. A remainderman can exercise their right to use and hold property in a trust, ...
When does a remainderman inherit property?
The remainderman will inherit the property upon the death or termination of the former owner’s estate. The property may also be inherited when there is a specific notation of the same in the trust.
What is a life estate?
A life estate refers to an arrangement in which a person’s ownership of property lasts for the duration of their life and then is transferred back to the original owner or a third party. That person to whom ownership of the property is transferred is the remainderman. In a trust account, a remainderman receives the principal remaining in the trust.
When does property interest transfer to the holder of the executory interest?
In other words, the property interest is transferred from the previous owner to the holder of the executory interest when the condition becomes true — the holder of the executory interest does not have to wait until the previous holder's interest expires.
What is a possibility of reverter?
The grantor retains a possibility of reverter if he conveys a fee simple determinable, which is a fee simple subject to some condition. For instance, if the grantor conveys land to be used to build a church, and the grantee does not build a church, then the land will revert back to the grantor automatically.
How to retain a right of entry?
To retain a right of entry, the grantor conveys a fee simple defeasible subject to a condition subsequent title. However, the grantor must obtain a court order to re-enter the property.
What is a right of entry?
Right of Entry. A right of entry (aka right of reentry, power of termination) is like a possibility of reverter except that the right of entry gives the grantor a choice to reenter the property if a condition is not satisfied. To retain a right of entry, the grantor conveys a fee simple defeasible subject to a condition subsequent title.
What happens if a contingent remainder cannot take effect?
If a contingent remainder cannot take effect because its condition is not satisfied , then the instrument that created the future interests in the property may list an alternative contingent remainder, who will take if a previous contingent remainderman cannot take.
What happens if the grantor does not convey his entire interest in the property?
If the grantor does not convey his entire interest in the property, then he retains a future interest. For instance, in Example 1, the grantor gives a life estate to C, and then the property goes to D, but only if D survives C. If D does not survive D, then the property reverts back to the grantor, or to the grantor's estate if he died, since someone must own the property.
What is a possessory interest in a will?
A possessory interest allows a beneficiary to possess the property when the interest is conveyed. However, a future interest only allows a beneficiary to possess the property ...
