Reversion (law)

In property law, reversion refers to a future interest in real property that remains with the grantor (the person who originally owned the property) or their heirs after they have granted a lesser estate of ownership to someone else. It arises when the grantor transfers an interest that is smaller than the interest they originally possessed.

Essentially, a reversion guarantees that the property will "revert" back to the original owner (or their heirs) when the temporary ownership interest terminates.

Key Characteristics:

• Created by Operation of Law: A reversion arises automatically from the conveyance itself, not from any specific language in a deed or will. If the grantor conveys a lesser estate, the reversion is created by default.
• Future Interest: The holder of a reversion (the grantor or their heirs) does not have the right to immediate possession. Their right to possession is deferred until the preceding estate ends.
• Transferable: A reversionary interest can be sold, devised (transferred through a will), or inherited, unless restricted by other legal agreements. The new owner of the reversionary interest will take ownership subject to the existing life estate or other lesser estate.
• Distinguished from Remainder: Reversion is distinct from a remainder. A remainder is a future interest that is created in a third party (someone other than the grantor or their heirs) at the same time the lesser estate is granted.

Example:

Alice owns a property in fee simple absolute (complete ownership). She grants a life estate in the property to Bob, meaning Bob has the right to possess and use the property for the duration of his life. Upon Bob's death, the property will automatically revert back to Alice (if she is still alive) or to Alice's heirs. Alice retains a reversion.

Relationship to Other Estates:

• Fee Simple Absolute: This is the highest form of property ownership, representing complete and unrestricted ownership. A reversion occurs when a fee simple owner grants a lesser estate.
• Life Estate: A life estate is an ownership interest that lasts for the duration of someone's life (either the life tenant's or another person's). The creation of a life estate automatically creates a reversion (in the grantor) or a remainder (in a third party).
• Leasehold Estate: While not directly related to reversion in the same way as life estates, when a landlord grants a lease to a tenant, the landlord retains a reversion. Upon the expiration of the lease, the right to possession of the property reverts back to the landlord.