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Introduction
In the previous chapter, we examined the life estate, a present possessory freehold estate measured by the life of a designated person. A life tenant enjoys the right to possess and use the property, but that right ends automatically upon the death of the measuring life. (Legal Information Institute)
This naturally raises the next question:
“When one person's ownership ends, who owns the property next?”
Property law does not permit ownership to disappear when a limited estate expires. Instead, the law recognizes future interests—presently existing legal interests that entitle their holders to possession of property at a later time. (Legal Information Institute)
Future interests are among the defining features of Anglo-American property law because they allow ownership to be divided across time. One person may hold the present right of possession while another already possesses a legally protected right to future possession. Understanding this doctrine is essential to the law of deeds, wills, trusts, estate planning, and conveyancing.
What Is a Future Interest?
A future interest is a presently recognized legal interest in real property that does not include the immediate right to possess the property. Instead, possession is postponed until a future event occurs.
A future interest is therefore different from a mere expectation or hope. It is an actual property interest recognized and protected by law. Depending upon its nature and the governing jurisdiction, it may be transferable, descend to heirs, or pass through a will.
This distinction is fundamental:
- Present possessory estate — includes the immediate right to possess the property; the holder currently occupies or controls the land (e.g., fee simple, life estate, leasehold).
- Future interest — possession is postponed until a future event; the holder has a present legal right to future possession (e.g., reversion, remainder, executory interest).
Property law therefore recognizes that ownership and possession are not always simultaneous. A person may already own a future interest while another person presently occupies the land.
Why Future Interests Exist
Future interests serve several important purposes within the law of property.
Continuity of Ownership
Land should not become ownerless merely because a limited estate expires. Future interests ensure that ownership passes automatically according to established legal rules.
Orderly Transfers
Property owners frequently wish to control the sequence of ownership. For example:
“To Alice for life, then to Benjamin.”
The law recognizes both interests at the moment the conveyance is made.
Estate Planning
Future interests permit property owners to provide for multiple generations. Parents, grandparents, and other property owners commonly use future interests in wills and trusts to determine who possesses property now and who will possess it later.
Marketability of Land
Recognizing future interests allows purchasers, lenders, title insurers, and courts to identify all legally significant ownership interests affecting a parcel of land. Understanding these interests promotes certainty in conveyancing and title examination.
The Two Fundamental Categories of Future Interests
American property law traditionally divides future interests into two principal categories:
- Future interests retained by the grantor.
- Future interests created in another person (a transferee).
This distinction depends upon who holds the future right to possession, not when possession occurs.
Future Interests Retained by the Grantor
Sometimes the grantor transfers less than the entire estate while retaining a future ownership interest. The principal grantor-retained future interests include:
- Reversion
- Possibility of Reverter
- Right of Entry (also called Power of Termination)
Reversion
A reversion arises when the grantor conveys an estate of lesser duration than the grantor owns and does not create a remainder in another person. Because the grantor has not disposed of the entire estate, the remaining interest automatically returns to the grantor—or the grantor's successors—when the prior estate naturally ends. (Legal Information Institute)
Example: O conveys "to A for life."
- Present estate: A — Life Estate.
- Future interest: O — Reversion.
When A dies, possession automatically returns to O (or O's successors).
Possibility of Reverter
A possibility of reverter accompanies a fee simple determinable. If the stated limitation is violated, the estate automatically terminates and ownership returns to the grantor without the need for further legal action.
“To A so long as the land is used as a public park.”
If the property ceases to be used as a public park, ownership automatically reverts to the grantor.
Right of Entry (Power of Termination)
A right of entry, also called a power of termination, accompanies a fee simple subject to a condition subsequent. Unlike a possibility of reverter, the estate does not terminate automatically. Instead, the grantor has the option to re-enter and reclaim the property if the stated condition is violated.
Future Interests Created in Another Person
Future interests may also be created in someone other than the grantor. The principal examples are:
- Remainders
- Executory Interests
Remainders
A remainder is a future interest created in a third party that becomes possessory immediately upon the natural expiration of the prior estate. A remainder waits patiently for the earlier estate to end. It does not terminate that estate prematurely. (Legal Information Institute)
Example: O conveys "to A for life, then to B."
- Present estate: A — Life Estate.
- Future interest: B — Remainder.
When A dies, B automatically acquires possession.
Vested Remainders
A vested remainder belongs to an identifiable person and is subject only to the natural termination of the preceding estate.
Contingent Remainders
A contingent remainder depends upon either:
- an unascertained person becoming identifiable; or
- the occurrence of a condition precedent before possession may occur.
The detailed classifications of vested and contingent remainders will be examined in a later chapter devoted specifically to remainders.
Executory Interests
An executory interest is a future interest held by a transferee that becomes possessory by divesting, or cutting short, another estate rather than waiting for its natural expiration. Unlike a remainder, an executory interest does not simply wait for the preceding estate to end. It operates upon the occurrence of a specified event. (Legal Information Institute)
Property law traditionally recognizes two principal forms.
Shifting Executory Interest
A shifting executory interest divests another transferee's estate.
“To A, but if alcohol is ever sold on the property, then to B.”
If the condition occurs, B automatically divests A's estate.
Springing Executory Interest
A springing executory interest divests the grantor after a future event occurs.
“To A beginning five years from today.”
Until the future event occurs, the grantor retains the present interest. At the specified time, A's interest springs into possession.
Future Interests and Estate Planning
Future interests remain important tools in modern legal practice. They frequently appear in:
- wills;
- revocable and irrevocable trusts;
- family property transfers;
- charitable gifts;
- conservation easements;
- succession planning; and
- long-term land management arrangements.
By separating present possession from future ownership, future interests permit property owners to plan for multiple generations while preserving legal certainty regarding title.
Common Conveyancing Examples
Example One
“To A for life.”
- Present estate: A — Life Estate.
- Future interest: O — Reversion.
Example Two
“To A for life, then to B.”
- Present estate: A — Life Estate.
- Future interest: B — Remainder.
Example Three
“To A so long as the property is used as a school.”
- Present estate: A — Fee Simple Determinable.
- Future interest: O — Possibility of Reverter.
Example Four
“To A, but if the property ceases to be used for residential purposes, O may re-enter and reclaim the land.”
- Present estate: A — Fee Simple Subject to Condition Subsequent.
- Future interest: O — Right of Entry.
These examples demonstrate that identifying the present estate and the accompanying future interest is one of the first tasks in analyzing a conveyance.
Common Misconceptions
"A future interest is only a hope."
It is not. A future interest is a presently existing property interest recognized by law, even though possession is postponed.
"Future interests cannot be transferred."
Not necessarily. Many future interests are transferable, devisable, and inheritable, although the applicable rules vary according to the type of future interest and the governing jurisdiction.
Relationship to Other Estates
Future interests are closely connected to every estate discussed thus far.
- Fee simple absolute ordinarily leaves no future interest because the entire estate has been conveyed.
- Life estates commonly give rise to reversions or remainders.
- Leaseholds may be followed by a reversion in the landlord.
- Defeasible fees frequently create possibilities of reverter, rights of entry, or executory interests.
Future interests therefore provide the legal mechanism that explains who owns the property after the present estate ends. (Legal Information Institute)
Looking Ahead
This chapter has introduced the principal categories of future interests. Subsequent chapters will examine these doctrines in greater detail, including:
- Reversions
- Remainders
- Executory Interests
- Defeasible Fees
- The Rule Against Perpetuities
Together, these doctrines form one of the most sophisticated areas of American property law.
Key Takeaways
- A future interest is a present legal right to future possession of real property.
- Future interests explain who owns property after a limited present estate ends.
- Some future interests remain with the grantor (reversion, possibility of reverter, right of entry), while others are created in third parties (remainders and executory interests).
- A remainder becomes possessory upon the natural expiration of the prior estate, while an executory interest divests another interest before its natural termination.
- Future interests are fundamental to deeds, wills, trusts, estate planning, title examination, and the orderly transfer of property across generations.
Continue Your Reading
Next Chapter — Reversions and Remainders
The next chapter examines the two most common future interests that follow life estates and other limited estates. It explores reversions retained by grantors, remainders created in third parties, the distinction between vested and contingent remainders, and the legal principles governing when these interests become possessory.