Reversions and Grantor-Retained Future Interests

Chapter 12 established the general framework of future interests and the classical division between interests retained by the transferor and interests created in a transferee. The present chapter develops the first branch of that division. When a grantor conveys less than the whole of what the grantor owns, something necessarily remains; and the law gives that remainder in the grantor a name, a classification, and a distinctive set of rules. Three such interests are recognized in Anglo-American law: the reversion, which follows a present estate smaller in quantum than the grantor's own; the possibility of reverter, which follows a fee simple determinable and takes effect automatically upon the occurrence of the limiting event; and the right of entry, also called the power of termination, which follows a fee simple subject to condition subsequent and takes effect only upon the exercise of an election by its holder. The three interests are easily confused, and courts have confused them for centuries; but the consequences of the classification are substantial, touching automatic versus elective termination, transferability, descendibility, devisability, exposure to statutes of limitation and marketable-title acts, and the practical burden the interest imposes on the title.

1. A grantor cannot convey more than the grantor owns; whatever is not conveyed remains in the grantor as a future interest. The retained interest arises by operation of law, not by express reservation, and it arises whether or not the deed mentions it. Restatement (First) of Property §§ 154–160; Restatement (Third) of Property (Wills and Other Donative Transfers) § 25.2.
2. A reversion is the interest left in a transferor who conveys a present estate smaller in quantum than the estate the transferor holds. A fee simple owner who conveys a life estate, a term of years, or a fee tail retains a reversion. The reversion is a vested interest even though its holder's right to possession is future and even though it may in fact never become possessory.
3. A possibility of reverter is the interest left in a transferor who conveys a fee simple determinable. It follows an estate whose duration is limited by durational language — “so long as,” “until,” “while,” “during” — and, at classical common law, it takes effect automatically upon the occurrence of the limiting event, without entry, demand, or suit.
4. A right of entry is the interest left in a transferor who conveys a fee simple subject to condition subsequent. It follows an estate qualified by conditional language — “but if,” “provided that,” “on condition that,” coupled with an express right to re-enter — and it takes effect only when the holder elects to exercise it. Until exercise, the grantee's estate continues.
5. The distinction between automatic and elective termination is the central operative difference among the retained interests. Automatic termination starts the running of the statute of limitations for adverse possession at once and vests possession in the holder without act; elective termination leaves the estate intact until exercise and exposes the holder to the equitable defenses of waiver, estoppel, and laches.
6. The classical common law made grantor-retained interests descendible and devisable but not alienable inter vivos. The rule reflected the medieval hostility to the assignment of a right of action. Modern American statutes have generally made all three interests freely transferable inter vivos, by descent, and by devise; a minority of jurisdictions retain restrictions on the transfer of a bare right of entry.
7. Grantor-retained interests are treated as vested for purposes of the Rule Against Perpetuities and are therefore exempt from it. The exemption is historical rather than principled, and it produced the anomaly that a durational limitation in favor of the grantor could endure forever while an identical limitation in favor of a third person was void. Modern statutes address the anomaly directly by imposing durational limits on the retained interests themselves.
8. Modern statutory reform has proceeded along four lines: durational limitation, re-recording requirements, functional merger of the determinable fee and the conditional fee, and equitable relief from forfeiture. Marketable-title acts, obsolete-restriction statutes, and specific reverter-limitation statutes now extinguish stale retained interests after a fixed period unless the holder records a preservation notice.
9. Courts construe conveyances against forfeiture. Ambiguous language is construed, where possible, to create a covenant rather than a condition; where a condition is found, it is construed as a condition subsequent (elective) rather than a special limitation (automatic); and equitable relief from forfeiture is available where the breach is trivial, the forfeiture disproportionate, or the holder has acquiesced.
10. Retained interests remain practically important in charitable gifts, conservation transactions, public-use dedications, and institutional conveyances. They are the classical device by which a transferor secures continuing adherence to the purpose of a gift, and they remain in wide use notwithstanding the modern preference for covenants, servitudes, and contractual reverter substitutes.

• Define the grantor-retained future interest and explain why such an interest arises by operation of law whenever a transferor conveys less than the whole.
• Distinguish the reversion, the possibility of reverter, and the right of entry, and identify with precision the present estate that gives rise to each.
• Apply the durational/conditional distinction to conveyancing language and predict whether termination is automatic or elective.
• Trace the historical development of the retained interests from Quia Emptores (1290) and the medieval doctrine of tenure through the Statute of Uses (1536) to modern American reform statutes.
• State the modern rules governing transferability, descendibility, and devisability of each retained interest, and identify the residual common-law restrictions.
• Explain the perpetuities exemption for retained interests and the statutory devices that now supply the durational limitation the Rule does not.
• Analyze the operation of marketable-title acts, reverter-limitation statutes, and re-recording requirements on stale retained interests.
• Evaluate the public policies for and against the retained interest, including certainty of title, enforcement of donative purpose, and freedom of alienation.
• Diagnose and correct the recurring misconceptions concerning grantor-retained future interests, particularly the belief that a reversion is contingent and that a possibility of reverter requires re-entry.

• Lewis M. Simes & Allan F. Smith, The Law of Future Interests §§ 281–302, 1861–1885 (2d ed. 1956).
• John Chipman Gray, The Rule Against Perpetuities §§ 31–41, 312–313 (4th ed. 1942).
• Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests 55–74 (2d ed. 1984).
• Roger A. Cunningham, William B. Stoebuck & Dale A. Whitman, The Law of Property §§ 2.5–2.7, 3.9–3.11 (3d ed. 2000).
• 2 William Blackstone, Commentaries on the Laws of England *154–*175 (1766).
• 4 James Kent, Commentaries on American Law *353–*360 (1830).
• Edward Coke, The First Part of the Institutes of the Laws of England (Coke on Littleton) §§ 325–347 (1628).
• Frederick Pollock & Frederic W. Maitland, The History of English Law Before the Time of Edward I, vol. 1, at 329–356 (2d ed. 1898).
• S. F. C. Milsom, Historical Foundations of the Common Law 99–151 (2d ed. 1981).
• A. W. B. Simpson, A History of the Land Law 47–102 (2d ed. 1986).
• Sir John Baker, An Introduction to English Legal History 245–290 (5th ed. 2019).
• Lewis M. Simes & Clarence B. Taylor, The Improvement of Conveyancing by Legislation 3–14, 251–268 (1960).
• Jesse Dukeminier, James E. Krier, Gregory S. Alexander, Michael H. Schill & Lior Jacob Strahilevitz, Property 219–246 (10th ed. 2022).

A grantor-retained future interest is a present legal interest in land, held by a transferor or the transferor's successors, whose right to possession arises upon the termination of a present estate that the transferor has carved out and conveyed away. The defining characteristic is not the content of the interest but the identity of its holder: the interest is retained rather than created. It does not pass under the deed; it stays behind. It requires no words of grant, no words of reservation, and no consideration. It arises because the grantor has conveyed less than the whole, and because the law does not permit ownership to be extinguished by an incomplete conveyance.

The principle rests on a proposition so elementary that it is rarely stated: a transferor cannot convey more than the transferor owns, and the sum of the estates existing in a parcel of land must at all times equal the whole. If A, holding a fee simple absolute, conveys to B for life, the conveyance accounts for B's lifetime and no more. The residue of the ownership — everything after B's death — must be somewhere, and since A has not given it to anyone, it remains in A. The interest thus remaining is the reversion. If A instead conveys a fee simple that is to end automatically upon the happening of a stated event, the conveyance accounts for the whole of the fee except the contingency that the event will occur; the residue, the interest that will bring the land back if the event occurs, remains in A as a possibility of reverter. If A conveys a fee simple subject to a condition the breach of which gives A a right to retake the land, the residue is a right of entry.

The classification is exhaustive at common law. Anglo-American doctrine recognizes exactly three grantor-retained future interests, and it recognizes no fourth. An interest that is not a reversion, a possibility of reverter, or a right of entry, and that resides in the transferor, is either not a future interest at all (it may be a covenant, a servitude, an equitable restriction, or a contractual option) or it has been misclassified. The exhaustiveness of the classification is a practical convenience: it permits the title examiner to reduce every retained interest in a chain of title to one of three known categories, each with a settled set of rules.

The classical taxonomy divides future interests according to whether they are retained by the transferor or created in a transferee. The division is not decorative. Interests created in transferees — remainders and executory interests, developed in Chapter 14 — are subject to the Rule Against Perpetuities, were historically subject to the doctrine of destructibility, and are governed by an elaborate apparatus of vesting rules. Interests retained by the transferor are, by contrast, treated as vested from the moment of their creation, exempt from the Rule Against Perpetuities, and largely free of the vesting apparatus. Two limitations expressed in identical language — one running to the grantor, one to a stranger — may therefore have entirely different validity.

Consider the classical illustration. A conveys “to the School District so long as the premises are used for school purposes.” The School District holds a fee simple determinable; A holds a possibility of reverter, exempt from the Rule Against Perpetuities, and valid however long the school use continues. Now suppose A instead conveys “to the School District so long as the premises are used for school purposes, and if they cease to be so used, then to the Public Library.” The Library's interest is an executory interest in a transferee. At classical common law it was void under the Rule Against Perpetuities, because the school use might cease centuries hence; and the void gift left the School District with a fee simple determinable and a possibility of reverter in A, or, on some authorities, a fee simple absolute. The disparity between the two conveyances rests on nothing but the identity of the taker, and it has drawn nearly universal criticism. It is examined in Part VII below.

A second consequence of the division concerns the source of the interest. A retained interest is never expressly granted, and it therefore never appears in the granting clause of a deed. A title examiner who searches only for affirmative grants will miss it. The retained interest appears, if at all, in the limiting words attached to the estate conveyed — the “so long as” clause, the “provided that” clause, the reservation of a life estate. The examiner's task is to read the words of limitation, not merely the words of purchase, and to infer from them what the grantor kept.

Each grantor-retained interest corresponds to a determinate present estate. The correspondence is fixed: given the present estate, the retained interest follows as a matter of law, and given the retained interest, the present estate can be identified with certainty. The following table states the correlative pairings and the operative rule of termination for each.

The table is the analytic spine of this chapter. Everything that follows elaborates one of its cells: Part III develops the reversion, Part IV the possibility of reverter, Part V the right of entry, and Part VI the boundary problems that arise when the drafter's language does not conform to the classical patterns.

The grantor-retained interests are the oldest future interests known to English law. They antedate the remainder, they antedate the executory interest, and they antedate the entire apparatus of vesting by which the later interests are analyzed. Their antiquity is not accidental: in a system of tenure, in which every holding was held of a lord and every grant created a new tenurial relationship, the interest of the grantor in the land granted was not an anomaly requiring justification but the ordinary condition of landholding. The modern reversion is the direct descendant of the lord's seignory, and the modern possibility of reverter is the direct descendant of the escheat and forfeiture by which the medieval lord recovered land upon the failure of the tenant's line or the tenant's breach of the feudal bond.

In the century following the Conquest, English landholding was organized as a hierarchy of tenures. A tenant did not own land in the modern sense; the tenant held of a lord, and the lord held of a superior lord, and so upward to the Crown. Subinfeudation — the creation of a new tenure beneath an existing one — was the ordinary mode of conveyance, and it left the grantor with a seignory: the right to services, to the feudal incidents of wardship, marriage, and relief, and to escheat if the tenant's line failed. As Pollock and Maitland demonstrate in their treatment of the doctrine of tenure, the seignory was itself a proprietary interest, and its holder was in a meaningful sense a co-owner of the land across time.

The Statute Quia Emptores, 18 Edw. 1, c. 1 (1290), abolished subinfeudation for conveyances in fee simple and substituted substitution: the grantee stepped into the grantor's place in the tenurial chain, and the grantor retained nothing. The Statute is the single most important event in the history of the retained interest, because it eliminated the seignory as an ordinary incident of the fee simple conveyance and thereby created the modern rule that a conveyance in fee simple absolute leaves no interest in the grantor. But Quia Emptores applied only to conveyances of the fee. A grantor who conveyed a life estate or a term of years continued, as before, to hold the residue; and this residue, now stripped of its feudal character, emerged as the modern reversion. Blackstone's definition at Commentaries *175 — “the residue of an estate left in the grantor, to commence in possession after the determination of some particular estate granted out by him” — is a statement of the post-Quia Emptores position.

Simpson's account in A History of the Land Law traces the further consequence: because Quia Emptores removed the tenurial explanation for the grantor's continuing interest, later lawyers were compelled to explain the reversion in proprietary rather than tenurial terms. The reversion ceased to be a lordship and became an estate — a defined temporal segment of the ownership of the land, vested in its holder, transferable, descendible, and enforceable. That reconceptualization is the foundation of the modern doctrine, and it explains why the reversion is today classified as a vested interest notwithstanding that its holder may never take possession.

The possibility of reverter has a distinct lineage. Before the Statute De Donis Conditionalibus, 13 Edw. 1, c. 1 (1285), a grant “to A and the heirs of his body” was construed as a fee simple conditional: A took a fee, subject to the condition that A produce issue, and upon the birth of issue A could alienate in fee and defeat the donor's expectation of reverter. The donor's interest before the birth of issue was a genuine possibility of reverter, and the litigation of the thirteenth century over the alienability of the conditional fee is the earliest sustained judicial engagement with the retained interest as a proprietary category.

De Donis converted the fee simple conditional into the fee tail and secured the donor's reversion against alienation by the tenant in tail. Milsom's analysis in Historical Foundations of the Common Law emphasizes that the statute was less an innovation than a judicial-political settlement of a question the courts had been unable to resolve: whether the donor's expressed intention that the land should return upon failure of issue would be honored against the tenant's interest in free alienation. The settlement favored the donor, and for two centuries the fee tail with its reversion was the dominant instrument of family settlement. Baker's Introduction to English Legal History details the eventual erosion of De Donis by the common recovery in Taltarum's Case (1472), which permitted the tenant in tail to bar the entail and destroy the reversion; but the doctrinal category of the retained reverter survived the destruction of the estate it was designed to protect.

The fifteenth-century use permitted conveyancers to evade the common-law rules governing legal estates and to create interests in transferees that the common law would not recognize. The Statute of Uses, 27 Hen. 8, c. 10 (1536), executed most uses and converted equitable interests into legal ones, with the consequence that shifting and springing interests — the modern executory interests — became recognized legal estates. The effect on the grantor-retained interests was indirect but substantial: it became possible, for the first time, to draft a limitation that on the occurrence of a stated event divested the grantee in favor of a third person rather than in favor of the grantor. The retained interest thereby lost its monopoly over conditional limitations, and the modern competition between the possibility of reverter and the shifting executory interest began.

The competition mattered because the two devices were subjected to different rules. Once the Rule Against Perpetuities crystallized in the seventeenth and eighteenth centuries — a development traced from the Duke of Norfolk's Case, 3 Ch. Cas. 1 (1682), through the classical statement in Gray's treatise — executory interests were subjected to the perpetuities period while the possibilities of reverter and rights of entry, treated as vested, were not. The differential treatment survives, largely unmodified by judicial decision, into modern American law, and it is the principal target of the twentieth-century reform statutes examined in Part VII.

The American states received the English law of retained interests substantially intact, though without the tenurial apparatus that had produced it. Kent's Commentaries at *353–*360 states the classical American position of the early nineteenth century: the reversion is a vested estate; the possibility of reverter operates automatically; the right of entry requires entry; and none of the three is assignable inter vivos. The nineteenth-century American cases developed the doctrine chiefly in two settings — the conveyance of land to railroads for right-of-way purposes, and the conveyance of land to towns, churches, and school districts for public or charitable uses. Both settings generated conveyances qualified by purpose limitations, and both generated litigation, decades later, over whether the purpose had failed and what became of the land when it did.

The New York property revisions of 1830 initiated the American statutory tradition of reform. Those revisions and their successors in other jurisdictions abolished the destructibility of contingent remainders, restricted the fee tail, and, in a number of states, addressed the alienability of the retained interests. The larger reform movement, however, waited until the middle of the twentieth century, when the accumulated burden of ancient possibilities of reverter on marketable title provoked the enactment of reverter-limitation statutes and marketable-title acts across the country. The work of Simes and Taylor on the improvement of conveyancing by legislation, published in 1960, supplied the intellectual foundation for that movement and remains the standard account of it.

A reversion is the future interest remaining in a transferor who conveys a present estate smaller in quantum than the estate the transferor holds. The standard cases are the conveyance of a life estate by a fee owner, the conveyance of a term of years by a fee owner or life tenant, and the conveyance of a fee tail (in jurisdictions retaining it) by a fee simple owner. In each, the estate conveyed is certain to end, and at its end the possession returns to the transferor or the transferor's successors.

The definition contains two elements that must be kept distinct. The first is the quantum comparison: the estate conveyed must be smaller than the estate retained, measured by the classical hierarchy of fee simple, fee tail, life estate, and term of years. The second is the absence of a complete disposition of the residue: if the transferor conveys “to A for life, then to B and his heirs,” the residue is fully disposed of, B holds a vested remainder, and no reversion remains. If the transferor conveys “to A for life, then to B and his heirs if B survives A,” the residue is only conditionally disposed of; B holds a contingent remainder, and the transferor retains a reversion that will become possessory if B predeceases A.

The classical law classifies the reversion as vested. The classification is often thought paradoxical, since a reversion following a life estate with an intervening contingent remainder may in fact never become possessory. But vesting in the classical sense does not mean certainty of possession; it means that the taker is ascertained and that no condition precedent stands between the interest and possession other than the natural termination of the preceding estate. The reverter is by definition ascertained — it is the transferor or the transferor's successors — and the reversion is by definition ready to take at the natural end of the particular estate. It is therefore vested, and it is vested whether or not it will in fact be enjoyed. Restatement (First) of Property § 154; Restatement (Third) of Property (Wills and Other Donative Transfers) § 25.2.

The consequences of the classification are practical. A vested reversion is exempt from the Rule Against Perpetuities, was not subject to the classical doctrine of destructibility, is descendible and devisable without qualification, and has been alienable inter vivos since the earliest period. It supports an action for waste against the life tenant, an action for injury to the inheritance against a stranger, and a suit for a declaratory judgment construing the instrument that created it. It may be mortgaged; it may be taken by a judgment creditor; it may be condemned, and in condemnation proceedings the reversioner is entitled to a share of the award measured by the actuarial value of the interest.

The characteristic setting of the reversion is the life estate, examined in Chapter 11. A grantor who conveys “to A for life” creates a present possessory freehold in A measured by A's life, and retains a reversion in fee simple absolute. Upon A's death the reversion becomes possessory automatically; no entry, demand, or suit is required, and no act of the reversioner is necessary to perfect the title. The same is true of the estate pur autre vie: a conveyance “to A for the life of B” leaves a reversion that becomes possessory on B's death, whether or not A survives.

The relationship between the life tenant and the reversioner is the classical source of the doctrine of waste, developed in Chapter 11. The reversioner's interest in the inheritance entitles the reversioner to protection against affirmative waste (voluntary destruction or exploitation), permissive waste (failure to make ordinary repairs or to pay carrying charges), and, in most modern jurisdictions, ameliorative waste (alteration that increases the value of the land but changes its identity in a manner the reversioner is entitled to resist). The reversioner may sue during the life tenancy for damages or an injunction; the reversioner is not required to wait until possession accrues. This is the clearest practical demonstration that the reversion is a present interest and not a mere expectancy.

A reversion is likewise the residual interest following a leasehold. A landlord who grants a term of years retains a reversion, and the classical incidents of the landlord-tenant relation — the right to rent, the right to enforce covenants running with the land, the right to re-entry for breach where reserved — are incidents of that reversion. The doctrine of merger, examined in Chapter 11, operates here: if the reversion and the term of years come into the same hands in the same right, the term is extinguished and the reversion becomes possessory at once.

The reversion has been freely transferable inter vivos since the medieval period, and it is descendible and devisable without qualification. The classical objection to the assignment of a right of action, which restricted the transfer of the possibility of reverter and the right of entry, never applied to the reversion, because the reversion is not a right of action but an estate. It is conveyed by ordinary deed, described by reference to the estate that precedes it, and recorded in the ordinary manner. A conveyance of the reversion carries with it, unless otherwise provided, the right to rents accruing after the conveyance, the benefit of covenants running with the land, and the reversioner's remedies for waste.

The reversion may also be partially conveyed. A reversioner may convey the reversion for a term, retaining a further reversion; may convey an undivided fractional interest, creating a cotenancy in the reversion; or may create out of the reversion a remainder in a third person, so that the further estate ceases to be a reversion and becomes a remainder. The last transaction repays attention: the classification of an interest as reversion or remainder depends on the state of the title at the moment the instrument takes effect, and a subsequent conveyance may convert a reversion into a remainder in the grantee without altering the substance of the interest.

A possibility of reverter is the future interest remaining in a transferor who conveys a fee simple determinable. The estate conveyed is a fee — potentially infinite in duration — but its duration is limited by a stated event, and upon the occurrence of that event the estate ends of its own force. Because the grantor has conveyed a fee, the quantum comparison that identifies the reversion does not apply; the grantor's retained interest is not a residue of quantum but a residue of contingency. The classical name expresses the point: what remains in the grantor is a possibility that the land will revert.

The characteristic language of the fee simple determinable is durational: “so long as,” “until,” “while,” “during,” “until such time as.” The words operate as words of limitation, defining the outer boundary of the estate granted, rather than as words of condition qualifying an estate otherwise complete. Restatement (First) of Property § 44 states the classical test: the estate is determinable where the limiting language is incorporated into the description of the estate itself. A conveyance “to the City so long as the land is used for a public park” creates a determinable fee; a conveyance “to the City, but if the land ceases to be used for a public park the grantor may re-enter” creates a fee simple subject to condition subsequent.

The defining operative feature of the possibility of reverter is automatic termination. Upon the occurrence of the limiting event, the determinable fee expires by its own terms and the possibility of reverter becomes a possessory fee simple absolute instantly, without entry, demand, notice, or suit. The holder need do nothing. The holder's failure to act does not waive the interest, does not estop the holder, and — on the classical view — does not permit the former grantee to claim a continuing estate.

Automatic termination produces three consequences of practical importance. First, it starts the running of the statute of limitations for adverse possession at the moment the limiting event occurs: the former grantee's continued occupancy is thereafter adverse to the holder of the reverter, and if the occupancy continues for the statutory period the holder's interest is barred. Because the limiting event may occur without anyone noticing, the doctrine has produced considerable hardship, and it is one reason the modern statutes require re-recording. Second, automatic termination fixes the date of the transfer for tax and valuation purposes at the date of the event, not the date of any subsequent assertion. Third, automatic termination means that the former grantee's conveyances after the event convey nothing, so that a purchaser from the grantee takes no title, however innocent.

A number of modern jurisdictions have softened automatic termination, either by statute requiring an affirmative assertion within a fixed period or by judicial application of equitable doctrines to conveyances whose limiting event has long since occurred without objection. The Restatement (Third) of Property (Wills and Other Donative Transfers) § 24.4 reflects the modern preference for treating determinable and conditional limitations alike and subjecting both to equitable control.

The determinable fee is the classical instrument of the purpose-limited gift. A donor who gives land to a college “so long as it is used for the instruction of youth,” to a municipality “so long as the premises are maintained as a public library,” or to a railroad “so long as used for railroad purposes” secures continuing adherence to the donative purpose by the threat of automatic forfeiture. The device is powerful precisely because it is self-executing: it requires no litigation to enforce, no continuing supervision, and no cooperation from the donee.

Its power is also its weakness. Purposes that were vital in 1890 may be obsolete by 1990; a school district that consolidates, a railroad that abandons a line, or a library that moves to new premises triggers a forfeiture that returns the land to the heirs of a donor long dead, often to persons who did not know the interest existed and who have no connection to the community the gift was meant to serve. The result is a windfall to remote successors and a cloud on the title of land that may have been improved at great expense. This pattern — the stale reverter — supplied the practical impetus for the reverter-limitation statutes examined in Part VII, and it explains the modern preference for the charitable trust with a cy pres power, or for the conservation servitude enforceable by injunction, over the determinable fee.

Where the donee is a charity and the gift is construed as creating a charitable trust rather than a determinable fee, the doctrine of cy pres permits a court to redirect the gift to a purpose as near as possible to the donor's original intention, rather than to enforce a forfeiture. The choice between the two constructions is therefore consequential, and modern courts, disfavoring forfeiture, are inclined to find a trust or a precatory statement of purpose where the language permits.

At classical common law the possibility of reverter was descendible and devisable but not alienable inter vivos. The rule reflected the medieval characterization of the interest as a bare possibility rather than an estate, and the associated prohibition on the assignment of choses in action and rights of entry. It produced an awkward result: the interest could pass to remote heirs by intestacy, multiplying and fragmenting across generations, but could not be sold back to the owner of the possessory estate, which was the one transaction that would have cleared the title.

Modern American law has generally abandoned the restriction. The great majority of jurisdictions, by statute or decision, now treat the possibility of reverter as freely alienable inter vivos, as well as descendible and devisable. The Restatement (Third) of Property (Wills and Other Donative Transfers) § 25.2 states the modern rule of free transferability for all future interests, retained and created alike. A residue of the old rule survives in a small number of jurisdictions, chiefly in the form of statutes that permit release of the interest to the holder of the possessory estate but not assignment to a stranger — a compromise that preserves the title-clearing transaction while discouraging speculation in forfeiture rights.

A right of entry, called in the modern literature a power of termination, is the future interest remaining in a transferor who conveys a fee simple subject to condition subsequent. The estate conveyed is a fee, complete on its face, to which the grantor has attached a condition; upon breach of the condition the estate does not end of itself, but becomes subject to termination at the election of the holder of the right. Until that election is made and manifested, the grantee's estate continues, and the grantee remains the owner in fee.

The characteristic language is conditional rather than durational: “but if,” “provided that,” “on condition that,” “in the event that,” typically coupled with an express reservation of a right to re-enter and retake the premises. The classical rule required the express reservation: a condition without a reserved right of re-entry created, at most, a covenant. Modern courts are less formal, and will imply the power where the conditional language plainly contemplates forfeiture, but the express reservation remains the safe drafting practice. Restatement (First) of Property § 45.

The right of entry is exercised by an unequivocal manifestation of the holder's election to terminate. At common law the manifestation was physical entry upon the land; modern law accepts the commencement of an action in ejectment or for a declaration of forfeiture, and in many jurisdictions a recorded written notice of election. Whatever the form, the exercise must be clear, must be directed to the breach relied on, and must be communicated in a manner the law recognizes. Ambiguous conduct — continued acceptance of benefits, negotiation over the breach, silence in the face of known violation — is not exercise, and may operate as evidence of waiver.

Because the interest depends on an election, it is exposed to the whole armory of equitable defenses that automatic termination avoids. Waiver bars the holder who, with knowledge of the breach, manifests an intention not to terminate. Estoppel bars the holder whose conduct has induced the possessor to invest in reliance on the continuance of the estate. Laches bars the holder who delays unreasonably to the prejudice of the possessor. And the general equitable jurisdiction to relieve against forfeiture permits a court to deny termination where the breach is trivial, inadvertent, or promptly cured, and where the forfeiture would be grossly disproportionate to the harm.

The statute of limitations operates differently as well. Because the estate is not terminated until exercise, the possessor's occupancy is not adverse to the holder until the holder elects; on the classical view the limitation period therefore does not begin to run on breach. A number of jurisdictions have rejected this reasoning as a source of perpetual clouds on title and have provided by statute that the period runs from breach, whether or not the power is exercised. The reform assimilates the right of entry to the possibility of reverter for limitations purposes and is one of several modern measures tending toward the functional merger of the two interests.

The classical common law treated the right of entry as the least transferable of the three retained interests. It was descendible; it was, after the Statute of Wills (1540), generally devisable; but an attempted assignment inter vivos was not merely ineffective — on the strict view it destroyed the interest, on the theory that an attempt to transfer a bare right of re-entry was champertous and manifested an intention to abandon. A minority of American jurisdictions preserved the destruction rule into the twentieth century.

Modern law has largely swept the restriction away. Most jurisdictions now permit the free inter vivos transfer of a right of entry, and even those retaining a restriction have almost universally abandoned the destruction consequence, treating an ineffective attempted assignment as a nullity that leaves the interest where it was. Release to the holder of the possessory estate has always been permitted, since it extinguishes rather than transfers the interest and clears the title. The Restatement (Third) of Property (Wills and Other Donative Transfers) § 25.2 states the modern position of full transferability.

The three retained interests are distinguished along five axes: the present estate they follow, the mode of termination, the availability of equitable defenses, the operation of the statute of limitations, and the historical rules of transfer. The following table states the comparison in the terms of modern American law, noting where the classical rule differs.

The line between the determinable fee and the fee subject to condition subsequent is drawn by language, and the language is often equivocal. Courts have long acknowledged the artificiality of a distinction that turns on whether the drafter wrote “so long as” or “provided that,” and the modern rule of construction resolves doubt in favor of the conditional form. Two reasons are given. First, the conditional form is less destructive: it permits equitable defenses, allows the possessor an opportunity to cure, and does not divest the possessor without an election. Second, the conditional form better serves the ordinary intention of a grantor who imposes a purpose limitation, since such a grantor generally wishes to secure compliance rather than to recover the land.

Where the language is genuinely ambiguous — “to the City for use as a public park”, without more — courts will often decline to find any forfeiture interest at all, construing the words of purpose as precatory, or as creating a covenant enforceable in damages, or as a condition enforceable only by a charitable-trust remedy. The hierarchy of constructional preferences is therefore: no forfeiture interest; if a forfeiture interest, a right of entry; and only where the durational language is unmistakable, a possibility of reverter. The Restatement (Third) of Property (Wills and Other Donative Transfers) § 24.4 endorses this ordering and treats the residual distinction between the two forfeiture interests as one of diminishing significance.

A conveyance that shifts the estate to a third person on the occurrence of a stated event creates not a retained interest but an executory interest in that person, and the estate conveyed is a fee simple subject to executory limitation. The difference is not merely nominal. The executory interest is subject to the Rule Against Perpetuities; the retained interests are not. The executory interest is created by grant and appears in the granting language; the retained interests appear only by inference. The executory interest divests the possessory estate whether or not its holder elects, so that the shifting interest is functionally closer to the possibility of reverter than to the right of entry, notwithstanding that it is conditional in form.

Where a gift over to a third person is void under the Rule Against Perpetuities, the classical consequence is that the void interest is struck and the balance of the conveyance is read as though the gift over had never been written. Whether the resulting estate is a determinable fee with a possibility of reverter in the grantor, or a fee simple absolute, depends on whether the limiting language is durational or conditional: durational language survives the striking of the gift over and leaves a reverter, while conditional language, being attached to the divesting gift, is struck with it and leaves the possessor with an absolute fee. The rule is technical, but it is the single most consequential application of the durational/conditional distinction in modern practice.

The twentieth-century reform of the grantor-retained interests responded to a single practical problem: the accumulation, in every American recording system, of ancient forfeiture interests created for purposes long since obsolete, held by successors who could not be identified, and clouding titles that were otherwise merchantable. The classical law had no answer. The interests were exempt from the Rule Against Perpetuities; they were descendible without limit; and they could not, in many jurisdictions, be released by assignment. Simes and Taylor's study of conveyancing legislation identified the problem and proposed the statutory model that most states have since adopted in some form.

The characteristic reform statute imposes a fixed period — commonly twenty-one, thirty, or forty years — on the duration of a possibility of reverter or right of entry, measured from the creation of the interest. At the expiration of the period the interest is extinguished and the possessory estate becomes a fee simple absolute, unless the holder has recorded, within the period, a notice of intent to preserve the interest. Recording the notice restarts the period. Some statutes apply prospectively only; others apply to existing interests, subject to a grace period during which holders of pre-enactment interests may record. The retroactive statutes have been challenged as takings and as impairments of contract, and have been generally sustained on the reasoning that a reasonable grace period affords the holder an opportunity to preserve the interest, and that the state's interest in marketable title is substantial. U.S. Const. amends. V, XIV.

Obsolete-restriction statutes attack the same problem from a different direction, providing that a use restriction enforceable by forfeiture becomes unenforceable when the restriction has ceased to serve any substantial purpose, or when conditions have so changed that enforcement would be inequitable. These statutes overlap with the equitable doctrine of changed conditions applicable to servitudes, examined in the servitudes chapters of this Volume, and they reflect the same underlying policy: a restriction that no longer benefits anyone should not be permitted to encumber land indefinitely.

Marketable-title acts operate more broadly. Rather than limiting a particular category of interest, they provide that a person holding an unbroken record chain of title for a specified root period — typically thirty or forty years — holds free of all interests arising before the root of title, subject to enumerated exceptions and to interests preserved by a recorded notice. Possibilities of reverter and rights of entry created before the root are extinguished unless preserved. The acts are the principal modern device for clearing ancient forfeiture interests, and they operate automatically, without litigation, at the moment the root period matures.

The interaction between marketable-title acts and reverter-limitation statutes is not always straightforward. Some states have both; some exempt charitable or governmental interests from one or the other; and some preserve interests as to which the limiting event has already occurred, on the theory that the holder's interest is then possessory rather than future. A title examiner must therefore identify which statute governs, whether the interest falls within an exception, whether a preservation notice has been recorded, and whether the limiting event occurred before the operative date.

A grantor-retained interest is recorded by the recording of the deed that creates the correlative present estate; there is no separate instrument. The interest is therefore discoverable only by reading the deeds in the chain and attending to the words of limitation. Because the interest never appears as a grant, it is not indexed as a conveyance to its holder, and it may be missed by an examiner who searches only the grantor-grantee indices for affirmative transfers. The problem is compounded where the interest has descended intestate through several generations: the current holders may be numerous, unlocated, and unaware.

An outstanding possibility of reverter or right of entry renders a title unmarketable if the limiting event may occur, and renders it defective if the event has already occurred. Standard title practice therefore requires (i) identification of every limiting or conditional clause in the chain; (ii) determination of whether the limiting event has occurred; (iii) determination of whether the interest has been extinguished by a marketable-title act, a reverter-limitation statute, or the running of the limitations period; and (iv) where the interest survives, procurement of a release from the holder or an appropriate title-insurance endorsement. Where the holders cannot be identified, a quiet-title action naming unknown claimants is the usual remedy.

Modern drafters who wish to secure a purpose without creating a forfeiture interest have several alternatives: a covenant enforceable in damages; a real covenant or equitable servitude enforceable by injunction; a charitable trust with a cy pres power; a conservation easement held by a qualified organization under the applicable state conservation-easement statute; or a contractual right of repurchase at a stated price. Each avoids the automatic divestment of the determinable fee and the clouded title of the perpetual reverter, and each is more amenable to modification as circumstances change.

The American case law on grantor-retained interests exhibits a coherent trajectory across two centuries. Nineteenth-century courts applied the classical rules formally: durational language produced automatic reverter, conditional language produced a right of entry requiring entry, and neither interest could be assigned. Twentieth-century courts, confronted with the practical consequences of that formalism, developed three lines of retreat — a constructional preference against forfeiture, an expansion of equitable defenses, and a willingness to sustain legislative extinguishment of stale interests. Twenty-first-century courts operate largely within the statutory framework the legislatures have supplied, and the residual common law functions chiefly to fill statutory gaps.

The leading modern line of authority concerns the construction of purpose language in gifts to municipalities, school districts, churches, and railroads. The recurring pattern is a nineteenth-century deed conveying land “for school purposes” or “for use as a depot,” followed a century later by consolidation, abandonment, or change of use, and then by litigation between the current possessor and the donor's remote heirs. Courts confronting these deeds have developed a settled hierarchy: language of purpose alone creates no forfeiture interest; language of purpose coupled with an express reverter or re-entry clause creates one; and where a forfeiture interest is found but the form is doubtful, the conditional form is preferred. The doctrinal evolution is thus from formal parsing of prepositions toward a functional inquiry into whether the grantor bargained for the return of the land.

A parallel line concerns partial failure of purpose. Where land conveyed for a stated use continues to serve that use in part, or serves a related use, courts have generally declined to find the limiting event, reasoning that forfeiture requires a complete and unambiguous departure from the stated purpose. The approach is consistent with the general disfavor of forfeiture and with the constructional preference for sustaining the possessory estate.

Retroactive reverter-limitation statutes and marketable-title acts have been challenged under the Takings Clause of the Fifth Amendment, as applied to the states through the Fourteenth, and under state constitutional analogues. The prevailing analysis sustains the statutes where they afford a reasonable period within which the holder may preserve the interest by recording. The reasoning is that the statute does not appropriate the interest but conditions its continuance on a minimal act of self-identification, which the state may require in aid of its recording system; and that the holder who fails to record has, in effect, abandoned an interest the state was entitled to treat as stale. Where a statute has extinguished interests without any grace period, or has applied to interests as to which the limiting event had already occurred and possession had already shifted, courts have been considerably less receptive.

The constitutional analysis is instructive beyond its immediate context, because it illustrates the general proposition that the states retain substantial authority to define, condition, and terminate future interests in aid of the recording system and the marketability of titles. That authority is the doctrinal foundation of the entire modern reform program, and it explains why legislative solutions have succeeded where judicial ones could not.

The retained interest sits at the intersection of two policies that Anglo-American property law has never fully reconciled: the policy of giving effect to the intention of a transferor who wishes to control the future use of transferred land, and the policy of keeping land freely alienable and titles readily marketable. The determinable fee and the conditional fee serve the first policy with unmatched efficiency; the marketable-title acts and reverter-limitation statutes serve the second at the cost of the first. Modern law does not choose between them; it stages them, permitting the retained interest to operate with full force for a legislatively determined period and then extinguishing it unless the holder affirmatively renews.

Three arguments support the continued recognition of the retained interest. First, it enables the purpose-limited gift, which has funded a large share of American educational, religious, municipal, and charitable land use. A donor who cannot secure the purpose may not give at all. Second, it supplies a self-executing enforcement mechanism that requires no continuing supervision, no litigation, and no cooperation from the donee — an advantage of particular importance to donors of modest means and to communities without institutional capacity to police covenants. Third, it preserves a coherent account of ownership: the transferor who conveys less than the whole must retain something, and the law's refusal to permit ownership to evaporate is a structural feature, not a policy choice.

Three arguments cut the other way. First, the perpetual retained interest permits the dead hand to control land indefinitely, a result the Rule Against Perpetuities forbids for interests in transferees and forbids for no principled reason less here. Second, automatic divestment is a harsh remedy, disproportionate to most breaches, and imposed without the notice, cure period, or judicial supervision that modern law ordinarily requires before a person loses property. Third, the diffusion of retained interests among unknown heirs imposes a real and quantifiable cost on every subsequent transaction in the affected land — a cost borne not by the donor but by remote purchasers who had no part in the arrangement. The modern statutory compromise, imperfect as it is, represents the legislature's judgment on how these considerations should be weighed.

The practical significance of grantor-retained interests is concentrated in four settings: estate planning, charitable and institutional giving, conservation and land-use transactions, and title examination. In each the practitioner's task is the same — to determine what the transferor intended to keep, to select the instrument that secures that intention at the least cost to the marketability of the title, and to document the arrangement so that a stranger reading the record fifty years hence can determine what the interest is and who holds it.

A competent examination of a title in which a retained interest may exist proceeds in five steps. Identify every deed in the chain containing durational or conditional language, however casually expressed. Classify the resulting interest as reversion, possibility of reverter, right of entry, or none. Determine whether the limiting event or condition has occurred, and if so when. Apply the governing marketable-title act, reverter-limitation statute, and limitations period to determine whether the interest survives. Where it survives, identify the current holders by tracing descent and devise from the original transferor, and obtain a release, a quitclaim, or a judicial determination.

On the transactional side, counsel for a purchaser should insist on an affirmative title-insurance endorsement over any identified retained interest, or on a quiet-title decree where the holders are unknown. Counsel for a possessor whose land is subject to a reverter should consider purchasing the interest, since a release from the reverter holder converts the determinable fee into a fee simple absolute at a cost that is usually a small fraction of the value the release adds. Counsel for a reverter holder who wishes to preserve the interest must attend to the recording requirements of the governing statute; in most jurisdictions the failure to record a preservation notice is fatal and cannot be cured after the period runs.

Certain errors recur with sufficient frequency to warrant express correction.

1. That a reversion is contingent because it may never become possessory. It is not. A reversion is vested by definition: its holder is ascertained and no condition precedent stands between it and possession other than the natural termination of the prior estate. Uncertainty of enjoyment is not contingency of interest.
2. That a possibility of reverter requires re-entry. It does not. The determinable fee ends of its own force upon the limiting event, and the reverter becomes possessory instantly. Re-entry is the mechanism of the right of entry, not of the reverter, and confusing the two produces errors in both directions — treating a reverter as forfeited by delay, or treating a right of entry as self-executing.
3. That a retained interest must be expressly reserved to exist. It need not. The retained interest arises by operation of law from the incompleteness of the conveyance. A deed that conveys a life estate and says nothing further leaves a reversion in the grantor as surely as if the reversion were spelled out.
4. That grantor-retained interests are subject to the Rule Against Perpetuities. They are not. All three are treated as vested at creation and are exempt. The durational control that the Rule supplies for transferee interests is supplied for retained interests, if at all, by marketable-title acts and reverter-limitation statutes.
5. That the words of a deed conclusively determine the classification. Modern courts read the instrument as a whole, in light of the circumstances of its execution, and apply a constructional preference against forfeiture. Durational words in an instrument that plainly contemplates an election will often be construed as creating a right of entry, and purpose words unaccompanied by any forfeiture clause will often be construed as creating no future interest at all.
6. That retained interests are archaic and of no modern importance. They appear in a substantial fraction of American chains of title, they govern the disposition of land conveyed for public and charitable purposes throughout the nineteenth and twentieth centuries, and they remain in active use in conservation, institutional, and estate-planning practice. A practitioner who cannot classify them cannot examine a title.
7. That a right of entry is lost merely by delay. Delay is relevant, but the operative doctrines are waiver, estoppel, laches, and the statute of limitations where the jurisdiction runs it from breach. Delay alone, unaccompanied by prejudice or by conduct manifesting an intention not to enforce, does not extinguish the power in most jurisdictions.

A grantor who conveys less than the whole of what the grantor owns necessarily retains something, and the law gives what remains one of three names. The reversion is the residue left in a transferor who conveys a present estate smaller in quantum than the transferor's own — a life estate, a term of years, a fee tail. It is vested from the moment of creation, becomes possessory automatically at the natural expiration of the prior estate, has always been freely transferable, and supports the transferor's remedies for waste and injury to the inheritance.

The possibility of reverter is the residue left in a transferor who conveys a fee simple determinable — a fee whose duration is limited by durational language. It takes effect automatically upon the limiting event, without entry or suit, and its automatic operation carries three consequences: the limitations period begins to run at once, the former grantee's subsequent conveyances are ineffective, and the date of transfer is fixed at the event. The right of entry is the residue left in a transferor who conveys a fee simple subject to condition subsequent — a fee complete on its face, qualified by a condition and an express power to retake. It takes effect only upon an unequivocal election, and its elective character exposes it to waiver, estoppel, laches, and equitable relief from forfeiture.

All three interests are treated as vested and are therefore exempt from the Rule Against Perpetuities — a historical anomaly that permitted the perpetual retained interest while invalidating an identically worded gift to a stranger. The classical restrictions on inter vivos transfer of the reverter and the right of entry have been abandoned in nearly every jurisdiction, and the interests are now generally alienable, descendible, and devisable alike. The durational control the Rule does not supply is supplied instead by marketable-title acts, reverter-limitation statutes, obsolete-restriction statutes, and, increasingly, by a judicial constructional preference that resolves doubt against forfeiture and in favor of the possessory estate.

The retained interests remain of first importance in charitable and institutional giving, conservation transactions, public dedications, estate planning, and title examination. The competent drafter selects among the determinable fee, the conditional fee, the covenant, the servitude, the charitable trust, and the conservation easement according to whether the transferor's dominant object is the return of the land, the continuance of a use, or the honoring of a donative purpose. Chapter 14 turns to the second branch of the classical taxonomy — the remainder and the executory interest, the future interests created in transferees — and Chapter 15 to the Rule Against Perpetuities that governs them.

• Lewis M. Simes & Allan F. Smith, The Law of Future Interests §§ 281–302, 1861–1885 (2d ed. 1956).
• John Chipman Gray, The Rule Against Perpetuities §§ 31–41, 312–313 (4th ed. 1942).
• Lewis M. Simes & Clarence B. Taylor, The Improvement of Conveyancing by Legislation 3–14, 251–268 (1960).
• Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests 55–74 (2d ed. 1984).
• Roger A. Cunningham, William B. Stoebuck & Dale A. Whitman, The Law of Property §§ 2.5–2.7, 3.9–3.11 (3d ed. 2000).
• 2 William Blackstone, Commentaries on the Laws of England *154–*175 (1766).
• 4 James Kent, Commentaries on American Law *353–*360 (1830).
• Edward Coke, The First Part of the Institutes of the Laws of England (Coke on Littleton) §§ 325–347 (1628).
• Frederick Pollock & Frederic W. Maitland, The History of English Law Before the Time of Edward I, vol. 1, at 329–356 (2d ed. 1898).
• S. F. C. Milsom, Historical Foundations of the Common Law 99–151 (2d ed. 1981).
• A. W. B. Simpson, A History of the Land Law 47–102 (2d ed. 1986).
• Sir John Baker, An Introduction to English Legal History 245–290 (5th ed. 2019).
• Restatement (First) of Property §§ 44–45, 154–160 (1936).
• Restatement (Third) of Property (Wills and Other Donative Transfers) §§ 24.3–24.4, 25.1–25.2 (2011).
• Statute De Donis Conditionalibus, 13 Edw. 1, c. 1 (1285); Statute Quia Emptores, 18 Edw. 1, c. 1 (1290); Statute of Uses, 27 Hen. 8, c. 10 (1536); Statute of Wills, 32 Hen. 8, c. 1 (1540); Statute of Frauds, 29 Car. 2, c. 3 (1677).