Kovats Real Estate School Practice Test

What type of reversionary interest does a grantor retain when granting a life estate to another party?

1. A fee simple estate

2. A life estate

3. An estate in reversion

4. A remainder interest

The correct answer is: An estate in reversion

When a grantor conveys a life estate to another party, they retain a reversionary interest in the property. This reversionary interest is known as an estate in reversion, which means that once the life tenant (the person granted the life estate) passes away or otherwise ceases to have control over the property, ownership of the property automatically returns to the grantor or their heirs. This is distinct from other types of interests, such as a remainder interest, where the property is set to transfer to a third party after the life estate terminates, rather than reverting back to the original grantor. The grantor's retention of the estate in reversion provides a clear claim of ownership once the conditions of the life estate are fulfilled. Thus, the type of reversionary interest retained by the grantor in this scenario is correctly identified as an estate in reversion.