Future interests are rights to property ownership that will take effect in the future. They are commonly tested on the bar exam because they require careful classification and analysis.
The main types of future interests include remainders, executory interests, and reversions.
Understanding how to identify each type is essential for answering property questions correctly.
What Are Future Interests?
A future interest is a present legal interest in property that does not give the holder the right to possess the property immediately, but may do so in the future.
Future interests arise when an owner transfers property but keeps some interest or gives another party an interest that will become possessory later.
Reversions
A reversion is a future interest retained by the grantor after conveying a lesser estate.
Example: O conveys “to A for life.” When A dies, the property automatically returns to O.
Reversions are retained interests and do not require any condition to become possessory.
Remainders
A remainder is a future interest created in a third party that becomes possessory upon the natural termination of a prior estate.
Example: O conveys “to A for life, then to B.” B holds a remainder.
Remainders must be capable of becoming possessory immediately upon the termination of the prior estate.
Vested vs Contingent Remainders
A remainder is vested if it is given to an ascertained person and is not subject to any condition precedent.
A remainder is contingent if it is given to an unascertained person or is subject to a condition precedent.
Example of contingent remainder: “to A for life, then to B if B graduates from law school.”
Executory Interests
An executory interest is a future interest that cuts short another interest rather than waiting for it to end naturally.
Example: O conveys “to A, but if B returns from Europe, then to B.” B holds an executory interest.
Executory interests do not follow the natural termination of a prior estate.
Rule Against Perpetuities (RAP)
The Rule Against Perpetuities states that certain future interests must vest, if at all, within 21 years after a life in being at the time the interest was created.
RAP most commonly applies to contingent remainders and executory interests.
If a future interest violates RAP, it is void from the beginning.
How Future Interests Are Tested on the Bar Exam
Bar exam questions typically require you to classify the type of future interest.
You may be asked to distinguish between a remainder and an executory interest, or between a vested and contingent remainder.
Another common issue is identifying whether RAP applies and whether an interest is valid.
Careful reading of the language in the conveyance is critical.
Common Exam Traps
Students often confuse remainders with executory interests. The key difference is that remainders wait patiently, while executory interests cut short another interest.
Another common mistake is failing to identify a condition precedent, which makes a remainder contingent.
A third trap is ignoring RAP issues when contingent interests are involved.
Quick Comparison
Reversion: retained by grantor
Remainder: follows natural termination of prior estate
Executory interest: cuts short another interest
Why This Matters
Future interests are heavily tested because they combine classification, timing, and rule application.
Mastering this topic allows you to quickly identify the correct interest type and avoid common mistakes that lead to incorrect answers.