FUTURE INTERESTS

B. Possibility of reverter:  Suppose the owner of a fee simple absolute transfers a fee simple determinable (supra, pp. 51-54). The grantor is said to retain a possibility of reverter. That is, if the fee simple determinable comes to an end, possession reverts to the grantor; since it is not certain that this will ever occur, the word “possibility” is used.

Example:  O owns a fee simple absolute in Blackacre. He conveys “to A and his heirs, so long as no liquor is sold on the premises, and if liquor is sold thereon, title to revert to O and his heirs”. After the transfer, O has a possibility of reverter; he will automatically regain possession if A or anyone holding under him sells liquor.

 1. Distinguish from reversion:  The possibility of reverter should be distinguished from the reversion (discussed infra, p. 71), which is a non-contingent prospect of getting the property back, Thus, if in the above example, O’s conveyance had been “to A for life,” with nothing more, O would have a reversion, not a possibility of reverter, since A’s life is sure to come to an end.

2. Alienability of possibility of reverter:  All states agree that a possibility of reverter is inheritable under the intestacy statute, and devisable by will. However, the states are in dispute about whether such a possibility of reverter may be conveyed inter vivos; the modern trend is to allow such conveyances. B,C&S, p. 226.

C. Right of entry:  If the holder of an interest in land conveys all or part of his interest and attaches a condition subsequent to the transferee’s interest, the transferor is said to have a right of entry (or as it is sometimes called, a right of entry for condition broken). This right gives the transferor ability to take back the estate if the condition subsequent occurs.

Example:  O owns Blackacre in fee simple. He conveys “to A and his heirs, on condition that liquor never be sold on the premises; if liquor is sold thereon, O or his heirs may re-enter the premises.” The conveyance to A has been made subject to a condition subsequent, and O therefore reserves a right of entry.

1. Not incident to reversion:  Sometimes, the only interest retained by a grantor is this right of entry for condition broken. This is the case in the above example, since O conveyed all his other interest in the land (his fee simple).

a. Incident to reversion:  Much more commonly, however, a transferor who holds a right of entry also holds a reversion. For instance, nearly every lease contains several right of entry clauses, by which the landlord may re-enter if the tenant breaches a covenant (e.g., the covenant to pay rent). Such a right of entry is incident to the landlord’s reversion at the end of the lease term.

2. Alienability:  The distinction between a right of entry incident to a reversion and one that is not so incident is important with respect to alienability.