A future interest in property is a legal right to that property that will begin at some point in the future. If a person has a future interest, then they do not have a right to possess or enjoy the property at this time. Future interests are created when an estate has a condition or “triggering” event that transfers ownership of a property right. One of the most common examples of a future interest is seen in a landlord-tenant relationship. While a person is renting a house, the landlord typically does not have the right to live in or enjoy the house. However, upon termination of the lease, the landlord will regain full rights to the property. In this case, the landlord has a future interest in the property. Future interests can typically be transferred by sale, gift, or will.
There are three main types of future interests:
- Reversion – “Bob gives property to Jane for life.” In this case Jane will have ownership of the property until she dies, at which point the property rights will return to Bob (or his estate). Here Bob has a future interest in the property that triggers when Jane dies.
- Possibility of Reverter – “Bob gives property to Jane, as long as she doesn’t drink alcohol.” This type of future interest occurs when an estate will revert to the grantor if a specific condition is violated. Here, Bob has a future interest in the property that triggers if and when Jane drinks alcohol.
- Right of Entry – “Bob gives property to Jane, on condition that Jane refrains from drinking alcohol.” This type of interest is a little different than a possibility of reverter in that the property will return to the grantor when the condition is violated and if the grantor decides to reclaim the estate. Here, if Jane drinks alcohol then Bob can decide to reclaim the property or not, it will not automatically transfer back to him if and when she drinks.