17.46 Reversions

17.46.1

In General

A "reversion" is a future estate created by operation of law and which is to take effect in possession in favor of a lessor, transferor, grantor, or his heirs, distributees, devisees, or legatees, after a precedent particular estate which has been granted, demised, or devised, has terminated.

A reversion amounts to a vested estate, since the individual entitled to it has a fixed right to future enjoyment. A remainder may arise either from the failure to dispose of an ultimate interest or by reason of the failure of an attempted, but invalid, disposal of an ultimate interest.

The term ?reversion? may be properly used to designate the estate left in the grantor, transferor, or his heirs during the continuance of a particular estate and also to refer to the residue left to the grantor, transferor, or his heirs after the determination of the particular estate. A lessor's estate, during the time that the outstanding leasehold estate exists and also the estate of the grantor of a life estate, do also constitute estates in reversion.

A reversion is distinguished from a remainder in that a reversion arises by operation of law while remainder is created by act of the parties.

Reversions are freely subject to conveyance (alienable). They may descend upon intestate succession, or pass under a will.

An individual or entity entitled to an estate in reversion is known as a "reversioner".

17.46.2

Possibility Of Reverter

A "possibility of reverter" arises in the case of conditional or qualified fees and is similar to a reversion in that it is a future interest which exists in favor of a grantor or his heirs. Nonetheless, the two interests are significantly different. A reversion accrues upon the natural expiration of a lesser estate, as in the death of a life tenant, and will always vest in possession. A "possibility of reverter" cuts off the full potential of the estate to which it adheres and may never vest in possession if the particular even which would trigger its actualization never occurs. For this reason, possibilities of reverter are more damaging to property values than are reversions.

Texas case law holds the possibility of reverter to be an estate in land, being an interest that may become possessory and representing ownership measured in terms of duration.  It is considered to be conveyed or descend by inheritance.  See Bagby v. Bredthauer, 627 S.W.2d 190 (Tex. App. 1981).  It is an interesting note that the statutory basis on which these cases are based is somewhat ambiguous because the codification process left out the words ?reversion or remainder in land?  from the source law.  (See Tex. Rev. Civ. Stat 8282 and Probate Code Sec. 58 and Tex. Rev. Civ. Stat. 1296 and Property Code Sec. 5.041.)  Nevertheless, later cases continue to hold the same way.

17.46.3

Right Of Re-Entry For Condition Broken

This right, also known as a "power of termination", originates when a grantor or transferor completely parts with a specified real estate interest, but with the provision that upon the breach of a condition subsequent, the grantor or transferor may retake the interest so transferred.

The "right of re-entry for condition broken" is of less value to any grantor or transferor than a "possibility of reverter". It is generally not alienable.

The judicial dislike of forfeitures and the ambiguous provisions in deeds or wills give the courts ample opportunities to interpret language, and thus, avoid a declaration of a forfeiture of an estate by finding: (1) that the language in question is neither a condition nor a limitation, but is, rather, a covenant, or (2) that if it is a condition, any breach of it, under the circumstances, has been waived.

17.46.4

Restrictions And Other Documents With Reversion

Documents that contain restrictions and documents that convey title but restrict usage to certain purposes such as religious use, schools, libraries and parks may contain language that the property "reverts" to the grantor if the property no longer is used for that purpose. Reversions may be contained in documents located far in the back chain. These matters must be excepted to in Schedule B of both owner and mortgagee policies.