Kovats Real Estate School Practice Test

Reversionary interest is associated with which of the following terms?

1. Less than freehold estate

2. Life estate

3. Leasehold

4. Fee simple estate

The correct answer is: Life estate

Reversionary interest is closely associated with the concept of a life estate. In real estate, a life estate is an interest in property that lasts for the duration of an individual's life. When that individual passes away, the property does not pass to their heirs; instead, it reverts to the original grantor or their heirs. This is where the term "reversionary interest" comes into play, as it signifies the interest that the grantor retains in the property until the life tenant's interest terminates. Understanding this relationship is crucial, as it highlights the nature of ownership interests in real estate. In a life estate, the life tenant has the right to use the property and benefit from it during their lifetime, but the grantor maintains a future interest. This future interest is what's termed the reversionary interest, which comes into effect upon the death of the life tenant.