Future Interests in Property: Definition & Related Concepts

Instructor: Shawn Grimsley
Legal interests in real property are not always limited to present owners. In this lesson, you'll learn about future interest and related concepts to help you under it better. A short quiz follows the lesson.

Possessory Interests v. Future Interest

Meet farmer Bob. Farmer Bob is a family farmer. His family has farmed the same ground for over 150 years, and farmer Bob wants to see his children farm the ground after he is gone. In order to accomplish this goal, farmer Bob is meeting with an attorney about giving his children a future interest in the farm while he keeps the right to possess and farm the ground. This scenario will help us illustrate an important distinction in real property law: the distinction between possessory estates in land and future interests in land.

A present possessory estate in land is an interest where you have the current right to possess and use the real property. Farmer Bob has a present possessory estate in the farm. Alternatively, a future interest is an estate in land where you have a present interest in real property but you don't currently have the right to possess it. Farmer Bob wants to give his children this type of interest now.

Vested v. Contingent Interest

You should note that a future interest may be vested or contingent. A vested interest basically means you have a secure, unconditioned present or future interest in the property. Nothing more has to happen before you have the interest in the property. For example, farmer's Bob's interest in the farm is vested. He has a present interest and a pretty much unconditional right to possess and use it as he sees fit (subject to land use regulations, of course).

A contingent interest, on the other hand, means some event or condition must arise or be met before your right becomes locked in. For example, let's say that farmer Bob doesn't want the farm split up, so he decides to give it all to his son Frank, so long as Frank outlives him. If Frank dies before dad, then Farmer Bob wants the farm to go to his son-in-law Sam. We can say that both Frank and Sam's future interests are contingent. Frank's will vest if he survives Dad and Sam's will only vest if Frank dies before dad.

Lesser Estates - Size Matters

Sometimes a person will grant a future interest, sometimes called a future estate, that is smaller than the estate held by the person granting it. An estate is simply an interest in land that is defined by two characteristics: (a) the fact that you either have a current right to possess the land or may have a right to possess it in the future (hence, future interests) and (b) the duration the person has possession.

The least restrictive estate is a fee simple absolute, which pretty much means you have a right to possession and use of the land indefinitely and can freely transfer it. A common lesser estate is the life estate, which entitles you to possess and use the land during your life, but you don't have the right to transfer it upon your death through probate.

For example, you may own a house in fee simple absolute, but decide to give your mother a life estate in the property. Since you have transferred a lesser estate than you possessed, you have reserved yourself a future interest in the property called a reversion because the property will come back to you after the death of the person holding the life estate.

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