In legal terms, a remainder refers to a future interest in property that is created in favor of a third party, known as the remainderman, upon the termination of a prior interest, typically a life estate or a term of years. The remainder interest arises when the grantor transfers property to one party for a specified period or life span, with the property reverting to another party, the remainderman, upon the expiration of the prior interest. The remainderman holds a future interest in the property, which becomes possessory upon the termination of the prior interest, without the need for further action or conveyance. Remainders can be vested, meaning the remainderman is certain to receive the interest, or contingent, meaning the interest is subject to certain conditions being met. The creation and interpretation of remainders are governed by property law principles and vary depending on the jurisdiction and the specific terms of the conveyance or instrument creating the interest.
n. in real property law, the interest in real property that is left after another interest in the property ends, such as full title after a life estate (the right to use the property until one dies).
A remainder must be created by a deed or will. Example: Patricia Parent deeds Happy Acres Ranch to her sister Sally for life and upon Sally’s death to Charla Childers, Sally’s daughter, or Charla’s children if she does not survive. Charla has a remainder, and her children have a “contingent remainder,” which they will receive if Charla dies before title passes. A remainder is distinguished from a “reversion,” which gives title back to the grantor of the property (upon Sally’s death, in the example) or to the grantor’s descendants; a reversion need not be spelt out in a deed or will, but can occur automatically by “operation of law.
A remainder is an interest in property that is transferred to a person or entity after the termination of a prior estate, such as a life estate or a term of years.
There are two main types of remainders: vested remainders and contingent remainders. A vested remainder is certain to become possessory upon the termination of the prior estate, while a contingent remainder is subject to a condition precedent that must be satisfied before it can become possessory.
A remainder interest is created in favour of a third party, whereas a reversion interest arises in favour of the grantor or their heirs when a prior estate terminates.
Yes, a remainder interest can generally be sold or transferred by its owner, subject to any legal restrictions or conditions imposed by the grantor or applicable laws.
If the contingent condition attached to a remainder interest is not satisfied, the remainder may fail, and the property may revert back to the grantor or their heirs, or it may pass to another designated beneficiary, depending on the terms of the conveyance.
Yes, remainders can be created in both real property and personal property, although the rules governing remainders may vary depending on the type of property and applicable laws.
If the designated remainderman dies before the prior estate terminates, the remainder may pass to the remainderman’s heirs or beneficiaries, or it may revert back to the grantor or their heirs, depending on the terms of the conveyance and applicable laws.
Yes, remainders can be contingent upon the happening of a specific event, such as the death of a named individual or the occurrence of a certain condition, before they can become possessory.
Yes, remainders can be created in trust instruments, where they may vest in beneficiaries upon the termination of a prior trust estate or upon the occurrence of specified events or conditions.
The treatment of remainders for tax purposes may vary depending on the jurisdiction and the nature of the property involved. It is advisable to consult with a tax professional or legal advisor for guidance on the tax implications of remainders in specific circumstances.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 29th March, 2024.
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