Definition
An estate in reversion is a type of estate left by the original owner (grantor) for themselves, to begin after the end of a specific estate that was granted by them. In essence, it is the interest that a grantor holds which takes effect once the particular estate they have carved out ends.
For instance, a landlord leasing out their property has an estate in reversion. Once the lease period expires, the landlord’s estate in reversion becomes possessory, meaning they regain the right to possess and control the property.
Examples
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Landlord-Tenant Scenario: A landlord leases a property to a tenant for a period of five years. During the lease term, the tenant has the right to possess and use the property. Once the lease expires, the landlord’s estate in reversion takes effect, and they can regain possession of the property.
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Life Estate Example: Suppose a property owner grants a life estate to an individual (life tenant) that allows them to live on the property until they pass away. The property owner’s interest in the property (reversion) will take effect once the life tenant dies, giving the property owner full possession and control.
Frequently Asked Questions (FAQs)
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What is an estate in reversion in real estate? An estate in reversion in real estate is an interest left by the grantor for themselves, which begins after the termination of some particular estate that they have granted.
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How does an estate in reversion differ from a remainder estate? An estate in reversion goes back to the original grantor upon the termination of the set estate, while a remainder estate is designated to a third party specified by the grantor.
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Can an estate in reversion be sold or transferred? Yes, the reversionary interest can be sold or transferred to another party before it becomes possessory.
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Are there any tax implications for an estate in reversion? Yes, there can be various tax implications depending on the transaction and the type of property involved. Consulting a tax advisor or legal expert is advisable.
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What happens if the grantor dies before the estate in reversion becomes possessory? The reversionary interest typically becomes part of the grantor’s estate and is handled according to the terms of their will or state inheritance laws.
Related Terms
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Life Estate: An interest in property that lasts for the life of a specific individual, after which the interest either reverts to the original owner or passes to another party.
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Remainder Estate: An interest in property that takes effect in the future upon the termination of a prior estate, given to a third party not involved in the original grant.
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Fee Simple: The highest form of property ownership that grants the owner complete control over the property for an indefinite period.
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Leasehold Estate: A temporary right to hold and use property under a lease agreement.
Online References
Suggested Books for Further Studies
- “Fundamentals of Modern Property Law” by Edward H. Rabin, Roberta Romano, Kwall Jeffrey L.
- “The Law of Real Property” by Richard R. Powell
- “Real Estate Principles: A Value Approach” by David Ling and Wayne Archer
- “Property: Examples & Explanations” by Barlow Burke
Fundamentals of Estate in Reversion: Real Estate Basics Quiz
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