Definition
A reversionary interest is a future property interest reverting to the original grantor or their heirs when a condition occurs or someone else's interest ends. Property automatically returns to the original owner.
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A reversionary interest occurs when property reverts to the grantor or their heirs. For example, if a grantor conveys land to a charity 'as long as it's used for charitable purposes, then to revert to the grantor,' the grantor has a reversionary interest. If the charity stops using it charitably, the property reverts automatically. Reversionary interests differ from remainder interests because they benefit the original grantor (or heirs) rather than a third party. Reversionary interests are presumed in some circumstances—if someone grants land without specifying what happens when the grant ends, some jurisdictions assume a reversionary interest. Reversionary interests can create title issues if the grantor dies—does the reversion go to the grantor's heirs? Courts typically say yes. Reversionary interests are less valuable than life estates (because they might never occur) but still have value that might be taxable or mortgageable. Environmental and conservation contexts often use reversionary interests when granting conservation easements.
Pro Tip
When buying property with a reversionary interest held by someone else, verify that the reversionary interest is unlikely to occur.
Example
A landowner conveys 10 acres to a school 'so long as it's used for school purposes.' If the school ceases using it for school purposes, the land automatically reverts to the original owner's heirs.