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What Is a Future Interest?

When it comes to real estate and anything involving real property, it is possible that one may actually have the title or deed to the property itself but cannot claim possession of the property. This happens usually when the property or estate is being leased by a landlord to a tenant. Thus, the landlord will gain the interest in the property back once the lease ends. This situation refers to what is known as future interest.

In situations of future interest, there is always an event that triggers the estate or property to be transferred to a person or entity. This event can be the end of a lease or the death of the current possessor. Common law recognizes 3 types of future interest events—2 in the transferee and 3 in the transferor. All types are dependent on the type of vesting done, which means that the person who will eventually own the property cannot be deprived of it by a third party despite not currently having it in possession.

The 2 kinds of future interest in the transferee, the one who receives the property, are vested and contingent remainder. The term remainder refers to whatever is “left over” from the grant given to a person. Thus, another party is involved other than the grantor and the grantee—a second grantee. The 3 kinds of future interest in the transferor are reversion, possibility of reverter, and right of entry. The first is dependent upon the absolute vesting of the estate in the grantor, while the second depends upon a violation of a condition. The third depends upon a violation of a condition and the wish of the grantor to reclaim the property.

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