Also known as: reversionary interest · remainder interest · future interest · reversion · remainder
Written by attorneys · grounded in primary & secondary sources — see below
A future interest in property that becomes possessory upon the natural termination of a prior estate or upon the occurrence of a specified event. The interest returns to the grantor or passes to a designated remainderman rather than remaining with the holder of the present estate.
Roberto Reyes assigned his reversionary interest in a pending patent application to Redline Automotive under a settlement agreement. The agreement contained terms so one-sided that a court found them unconscionable at formation. The court refused to enforce the assignment clause while leaving the remainder of the settlement intact.
Raymond Ramos created a trust leaving an outright remainder interest to his disabled granddaughter Riley Rivera. After Ramos died, unforeseen medical costs threatened to exhaust the trust. The court converted the remainder into a special needs trust to preserve assets and fulfill the settlor's purpose.
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Rajesh Rao sold equipment to Regal Apparel under a contract containing an unconscionable reversion clause that would have returned title upon any late payment. The court limited the clause's application to avoid an unconscionable result while enforcing the balance of the agreement.
Rhea Reynolds leased property subject to an affirmative covenant to maintain a shared driveway. The covenant could be performed more reasonably by the lessee than by the holder of the reversion. The burden therefore ran with the leasehold rather than remaining with the reversioner.
Riverstone Manufacturing merged into Riverside Healthcare with Riverside as the survivor. All contract rights and property of Riverstone vested in Riverside by operation of law. No reversion to the original owners or impairment of interests occurred.
Robert Rivera formed an LLC that later merged into another LLC with the second entity as survivor. All property of the first LLC vested automatically in the survivor. The merger statute prevented any reversion or transfer requirement.
A reversionary interest returns to the grantor or the grantor's successors upon termination of the prior estate. A remainder interest passes instead to a third party designated in the creating instrument.
A court may modify a trust's dispositive provisions, including remainder interests, when circumstances not anticipated by the settlor make the change necessary to further the trust's purposes.
No. Merger statutes provide that all property and contract rights of a nonsurviving entity vest in the survivor without transfer, reversion, or impairment.
The doctrine presumptively created a reversionary interest when a grantor conveyed property to the grantor's own heirs. Modern statutes abolish it as both a rule of law and a rule of construction to honor the grantor's expressed intent.