FUTURE INTERESTS

a. Incident to reversion:  Where the right of entry is incident to a reversion the general rule today is that it passes with the reversion. Thus if a landlord sells his interest in property, and assigns the leases he holds, the assignee may retake the premises in situations where the original landlord could have done so. Moynihan, p. 108.

b.  Not incident to reversion:  Where a right of entry is not incident to any reversion, however, alienability may be somewhat more restricted.

i. Inter vivos transfer:  At common law, such a right of entry could not be conveyed inter vivos.

ii. Present-day split:  Today, most states continue to treat a right of entry unaccompanied by a reversion as not transferable inter vivos. A minority, however, have enacted statutes permitting such a transfer, either in all cases or at least where a breach of the condition has already occurred. Powell, Par. 282, pp. 249-52.

iii. Devise and descent:  On the other hand, in most states a right of entry without a reversion is devisable and descendible. Moynihan, p. 109. See Rest., §164, Comment a; §165. A minority of states maintain the traditional rule that the right of entry is neither descendible nor devisable.

D. Executory interests:  The possibility of reverter and the right of entry are both defined as to belong to the grantor, rather than a third person. However, under modern law, an interest similar to a fee simple determinable, or to a fee simple subject to a condition subsequent, can be created that gives a third person an interest comparable to a possibility of reverter or to a right of entry. In such a case, the present interest is called a “fee simple subject to an executory interest,” and the third party has an executory interest. See the further discussion of this topic infra, p. 89.

III. REVERSIONS

A. Reversions generally:  A reversion is created when the holder of a vested estate transfers to another a smaller estate; the reversion is the interest which remains in the grantor. See Rest. 2d (Donative Transfers) §1.4, Comment c.

Example:  A holds a fee simple absolute in Blackacre. He conveys “to B for life.” A has retained a reversion, which will become possessory in A (or his heirs) upon B’s death.

1. No reservation needed:  It is not necessary that the grantor specifically reserve a reversion in himself. As long as the estate conveyed is legally smaller than the grantor’s original estate, he retains a reversion. Thus in the above example, A retained a reversion even though nothing to this effect was stated in the grant, since a life estate is smaller than a fee simple.