§ 13.01 Three Future Interests [159-160]

 

Future interests are classified according to the identify of the holder—the transferor or the transferee.  Three types of future interests may be held by the transferor: the reversion, the possibility of reverter, and the right of entry.

 

§ 13.02 Types of Future Interests [160-161]

 

                        [A]       Reversion

 

When an owner conveys a vested estate smaller than the estate he owns, he retains a future interest called a reversion.  For instance, if O holds fee simple absolute, but conveys merely a life estate to A, O retains a reversion.

 

                        [B]       Possibility of Reverter

 

When a transferor creates a fee simple determinable, the future interest retained is a  possibility of reverter.  For example, if O conveys land “to L for so long as used as an orphanage,” O retains a possibility of reverter.

 

                        [C]       Right of Entry

 

The right of entry arises when a transferor creates a fee simple subject to a condition subsequent (e.g., O conveys “to L, but if L fails to use the property as an orphanage, then O may enter and retake possession”).

 

§ 13.03 Transfer of Interest [161-162]

 

The reversion is freely transferable.  At one time, limits were placed on the transferability of the possibility of reverter and right of entry during the holder’s lifetime; today, however, both of these interests are freely transferable.

 

§ 13.04 Other Rights of Interest Holder [162-163]

 

Before the transferor’s future interest becomes possessory, his rights are quite limited.  He can bring suit if the possessor commits waste and, in some states, can also share in eminent domain proceeds if the property is condemned.

 

§ 13.05 Modern Reforms [163-164]

 

Many states now restrict the possibility of reverter and right of entry by statute.  For example, in some jurisdictions such an interest will lapse within 20 or 30 years of creation unless the holder files a notice of intent to preserve it.